CDIC Annual Public Meeting - May 15, 2019 | General financial discussion | Discussion forum

CDIC, of which we all, as Canadian citizens, own indirectly, will be holding its Annual Public Meeting at a Payments Canada summit on May 15, 2019. You can pre-submit any questions via e-mail or Twitter and they'll do their best to ask as many questions that members of the public submit. No idea if the meeting will be webcast live, but I suspect an archived webcast will be available via either the CDIC website or, at a minimum, CPAC's website (which often covers such government agency and Crown corporation meetings).

Former National Bank Financial bank stock analyst and current CDIC President & CEO Peter Routledge will give one of the keynote speeches.

CDIC will also unveil what it calls an "ambitious" goal being "T+0," which means that depositors will be reimbursed on the same day that a CDIC insured financial institution failed. Part of this strikes me as a bit of marketing/PR fluff, since most, if not all, CDIC member institution failures see the failed financial institution's assets and liabilities absorbed - in full - by way of a transfer to an assuming financial institution. Nevertheless, it helps their branding of CDIC being like a warm, snuggly, purple security blanket. 😉

Separately, and further to discussion here and here, I was able to glean a few more details on the CDIC Act modernization - some of the changes of which are either in force or not yet in force. So, aside from the elimination of the 5-year maximum on GIC terms and inclusion of foreign currency deposits in CDIC insurance, here are the lesser known changes we didn't yet discuss and which were from its 2018 Annual Report:

• Provide separate coverage up to $100,000 for deposits held in Registered Education Savings Plans (RESPs) and Registered Disability Savings Plans (RDSPs) [already discussed]
• Set out specific coverage and disclosure requirements for the following types of deposits held in trust:
  – Nominee broker deposits
  – Professional trustee deposits
  – General trust deposits [this is all a good step; will be interesting to see how this plays out - watch this space]
• Remove separate coverage for deposits held in mortgage tax accounts, which will be covered under the individual or joint categories instead. [this surprised me a bit, as this has been a long-standing, separate CDIC deposit insurance category. I was surprised by the suddenness that CDIC would just eliminate deposit insurance on previously eligible deposits. They're still insured, but as part of your non-registered deposit limit (sole or joint, depending on how the mortgage property tax account is held). This is how TFSAs used to be.]
• Eliminate coverage for travellers’ cheques, as member institutions no longer issue them [kind of surprising, since Scotiabank still cashes American Express travellers' cheques and there's still quite a few travellers' cheques in circulation]

Other highlights from CDIC's annual report:

• CDIC's undrawn borrowing limit with the Government of Canada's Consolidated Revenue Fund (or from "market sources") was increased by $1 billion from $22 billion to $23 billion (pg. 3)
• CDIC has $4.3 billion Canadian in cash and cash equivalents/marketable securities, namely AAA-rated corporate and government debt securities, that it can tap to cover insured deposits, in addition to its borrowing limit
• CDIC insured deposits, calculated as at April 30, 2018 following its fiscal year-end, was $774 billion Canadian, an increase of $33 billion Canadian, or 4.4%. By comparison, TD Canada Trust has ~$900 billion Canadian in Canadian and U.S. customer deposits, about half of which were booked in Canada, so that shows that there's a large percentage of non-CDIC insured deposits.
• Domestic banks and subsidiaries increased from 47 to 50. Domestic trust companies remained constant at 15. Foreign bank and branch subsidiaries numbered 17.
• There are four (4) categories that CDIC member institutions pay for deposit insurance, which are calculated as basis points (less than 1%) of insured, on-balance sheet deposits for the year. CDIC and/or OSFI assign members into a risk category, with the lower the number being the lowest risk and thus they pay the lowest premium. One would suspect that the "Big 5" banks, and their subsidiaries, are at Category 1. Category 1's premium is 6.5 bps (0.065%) of insured deposits. Category 2 is 13 bps (0.13%). Category 3 is 26 bps (0.26%). Category 4 is 33.3 bps (0.333%). Understandably, CDIC does not disclose which category institutions are assigned and the CDIC Act prohibits members from disclosing which category they've been placed. For the most recent recent April 1, 2017-March 31, 2018 fiscal year, there were 83 institutions in Category 1; 11 in Category 2; 5 in Category 3; and 1 in Category 4. One might be able to figure out which category a given institution is in by cross-referencing the CDIC annual report with the institution's public financial statements, if available, and examining what they paid in deposit insurance from their Statement of Cash Flows and their total deposits from their Balance Sheet.

Cheers,
Doug