Are there any banks that you would go above CDIC limit? | Page 2 | Motive Financial | Discussion forum

Great points, Rick. Bank of B.C. was the largest failure of a financial institution in Canada, provincially or federally, and what happened in that case? A large overseas bank in the Hongkong & Shanghai Banking Corp. was likely salivating at the opportunity, swooped in and bought it - no claims, as far as I know, needed to be paid by CDIC. Also note Prenor Trust Company, also swallowed up by HSBC Bank Canada, which was either merged into or continued as HSBC Loan Corporation, which has now since been amalgamated into HSBC Mortgage Corp.

Standard Trust Co. could be the same company that ultimately was swallowed up/merged into Standard Trust Co. of Canada, which is now part of Manulife Trust.

Also, note a lot of the failures were "mortgage investment corps," which are now an unregulated sector and raise capital by share issuances to investors on an exempt-issuer basis. Not sure if they were the same sort of MICs as the MICs today but, if so, it's instructive of the much, much tighter underwriting standards in terms of lending and capital adequacy thresholds.

Any failures since have tended to be in the provincially-regulated credit union space and, even there, it's simply a matter of the illiquid or distressed credit union's assets and members being absorbed into a larger one (i.e., the largest being when Valley First Credit Union was absorbed into Envision Credit Union to form First West Credit Union). B.C.'s Financial Institutions Commission stepped in and basically ordered them to do a merger deal. 😉

Cheers,
Doug

Except most of the big banks have at least one e-saving option, usually promotion or rules based, that can have pretty good HISA interest. TD has one, BMO has one and Scotia has one that I know of. Then, of course there is Simplii and Tangerine, both owned by the big banks. The big 5 are not going to completely roll over, albeit they will be quite as competitive as some of the online offereings.

For a lot of people who don't like proliferation of accounts, simplicity is worth something, even if it costs 50bp or so. Both sets of institutions thrive for a reason, i.e. different strokes for different folks.

P.S. The big banks would love to get rid of bricks and mortar transactions, i.e. the old folk who still come to a teller for banking and/or paying their bills! But until they all die off, there will still need to be at least one teller in each branch. Branches will eventually become financial advisory and mortage outlets only, and continue consolidation.

Loonie said
I'm sure AltaRed knows what s/he's talking about as s/he has told us several times that s/he is a big bank shareholder and has sons working there, so the welfare of these banks is very important to that family.

I would also add that the big banks all have very significant foreign dealings. While our retail deposits are significant, they have lots of other stuff going on to bring in the profits.

However, the online banks are gaining on them. Eventually, they will all need to own one of them to keep on top of things. BigBank promo deals tend to have more fine print problems than dealing with the newer banks and are less renewable, so are not generally as attractive. BigBanks as such have lost almost all of my deposits over the last few years, but it's still small potatoes to them, so they don't care - and have made that abundantly obvious! We still have our credit cards with them though, as I find them better to deal with - for that purpose only. Of course, we pay it off every month, so their profit is only on the merchant side, but I guess it must still be profitable for them, considering how many offers they send us! I'm considering moving that business to Rogers Bank as soon as they figure out pre-authorized debits for their monthly bill.

I wonder how long it will take before the tellers at bricks and mortar say to customers, "If you moved this money to our online bank, Tangerine (or whichever), you would earn a lot more interest." Right now, if you complain about low/no interest, all they want to tell you is to move it to a brokerage account or mutual funds.

The difference between the online banks and BigFive isn't 50 baps any more. My average return this year is about 175 bps more than I would have gotten at my BigBank savings account. On 500K, the minimum required by companies like PWL Capital and others, that's a lot of money - much more than you'd pay PWL to manage it all for you!  

I didn't know of AltaRed's shareholdings. (Was that sarcasm, perhaps? If so, funny! :)) That said, I, too, hold common stock in three of the "Big 5" banks (Scotiabank, CIBC and TD) in my brokerage account and one overseas bank in certificated form on the London principal register (HSBC Holdings plc). However, I personally don't like the "Big 5" banks rules-based savings offerings that are highly conditional and often temporary promotions (hrm! looks like they took a page from Tangerine's "playbook"!). 🙂

I agree with you, Loonie, the "Big 5" banks are doing lots of things to "goose" or "pad" their earnings, including selling off head office real estate properties, bank branches that they own under long-term leaseback deals, cutting costs and staff, increasing fees, the aforementioned highly conditional interest rate offers, not raising deposit rates with every BoC rate increase, buying back preferred shares at opportune times, buying back common stock largely to offset the dilutive effect of overly generous management and employee stock option regimes, capital markets business(es), raising fees in wealth management and, last but not least nor all, crediting back previous provisions for loan losses (a dodgy way to manipulate earnings, if you ask me - are they really less risky or is it just a short-term, market-based thing?).

Loved how you integrated the comment about PWL Capital, too. You're right and I should mention, I believe Justwealth caps their fees at something like $80-120 a month so, on that amount of money, you're only paying about 0.0030% (give or take) plus about 0.25% (give or take also) in underlying MER on mutual funds. Granted, that comes with commensurately higher risk and no CDIC insurance but it also comes with greater certainty of upside. You'll know you'll at least get market returns, which should range from a low of 3% per year to an average of 5-7% and upwards of 9-10%, over the really long term.

Cheers,
Doug

Just to clarify, what the Rogers CC doesn't have is the capacity to let you pay said bill automatically every month as a pre-authorized debit from your bank account, wherever it may be. They say they are working on it. When they've finished working, perhaps I'll start. Or maybe sooner but only for foreign exchange shopping online. I don't do a lot of it, but I hate losing money on it!

They may, however, allow you to automatically put, for example, your phone bill, on their CC. I did not inquire about that.