Rough times for Canadian Western Bank | Motive Financial | Discussion forum

Not an issue though if one stays within CDIC insured limits.

Need to look at this in wider context.

CWB does have broader exposure to oil and gas than most if not all other banks.

On the other hand, in the previous quarter Scotia was down 12%, and National Bank was down a whopping 48% (but increased its dividend anyway).

It's not a concern for savers as long as within CDIC limits, as AltaRed said.

It might be a concern for investors though. Personally I find it frightening that National Bank raised its dividend 1.9% when they had 48% loss. No doubt their accountants found a way to justify this. However, it shows the importance of keeping your eyes on the road if you invest in bank stocks. They will continue to churn out the dividends because they want you to believe all is well so that you will not sell. Maybe it is, but you do need to pay attention. And profits will continue to be affected by the price of oil. It is (still) too big a piece of our economy to not have that impact.
In some other quarter (next year?), the problem might be a collapse in the housing market. Ultimately, the question is how well a given bank has managed to insulate itself from fallout in various sectors. Smaller banks may have less insulation. When you get a satisfactory answer to that question, then go ahead and invest. But don't do it just because you imagine this to be an unassailable gravy train.

AltaRed said

Not an issue though if one stays within CDIC insured limits.

Agreed - this is a non-issue, and even then, banks usually have multiple subsidiaries that are CDIC members that allow you to maintain multiple GICs and accounts with multiple CDIC members of that institution from within your single online banking profile. And even further, if this concerns, adding just one new person onto an account (i.e., three people instead of two) becomes a new "depositor" in CDIC's eyes and is separately insured. So there's lots of creative ways to have everything CDIC insured - if you trust all your family members, of course.

Also, something that shouldn't be overlooked - in a bank failure, what would likely happen, CDIC would step in, operate the institution on an interim basis and would most likely find a financial institution willing to acquire its assets and liabilities in full with no negative impact on the deposit insurance fund. While the acquiring institution wouldn't likely be liable for unpaid interest over the CDIC limit per depositor and per issuer, they would be acquiring all deposits, both those under CDIC limits and those above, thereby ensuring your deposits would remain fully intact, though they'd likely have a lower interest rate than the failed institution.

CDIC is a nice "security blanket" that gets mentioned too often in these forums but, in reality, it's really never used. Even in the largest financial institution failure, the Bank of British Columbia, in 1986, I don't believe any deposits in excess of CDIC limits were lost. They simply found a more than willing suitor in then Hongkong Bank of Canada to acquire its assets and liabilities. The only real "loser" in that case would've been the province of B.C., which was the shareholder as it was a Crown corporation at the time, and would've got nothing.

Cheers,
Doug