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Email this10:42 pm
December 12, 2009
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Thanks for sharing, Greg! Agreed, 2% bonus from PC Financial isn't really worth the move and if RBC is offering a 2% bonus promotion, why not hold things there? 
That said, I chose to move my funds via cheque deposit this time. One nice thing to Tangerine's delayed cheque clearing: I got 2 days interest in two places (works out to about $16 extra on ~$84,000.00). Then, on Jul. 31st, I moved funds to my Tangerine Chequing (didn't want to risk leaving it too long and having it bounce!) where it earns a full 1% so I'm easily earning about $2.50 extra for every day they take to clear it - and still earning 1.95% at Implicity. That's one advantage to Implicity - being able to deposit at any credit union ATM in Canada with your debit card!
Loonie, valid point on a cashable 1-year 2% GIC (surprised it's cashable, usually that's non-redeemable). That's a great deal and most people should be able to hold something for three months.
Oaken Financial told me several months ago they planned to implement the paperless electronic bank-to-bank transfer account registration. Since you bank with them, can you confirm that to be the case and, also, any possible chance you can post screenshot(s) of online banking interface?
Cheers,
Doug
12:32 am
October 21, 2013
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I only have an RRSP GIC with Oaken, and have not even accessed it online yet. They don't send me any emails either, which seems strange. I have my certificate for the GIC, which they sent by snail mail, and plan to more or less ignore it until it comes due in 5 years.
Sorry, I'm no help.
And, yes, people should be able to hold something for 3 months. Perhaps more significantly in this particular situation, the best value, such as it is, from the PC promotion, is if you hold your deposit in place for the 3 months, making it the same as Oaken.
Perhaps we should now be warning people that PC Financial is NOT separately insured (apart from other CIBC investments) by CDIC. It should now perhaps more accurately be referred to as "CIBC PC Financial", to make the point very clear. I think that's what I'll call it in future.
1:22 pm
October 21, 2013
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I hear what you're saying, Brian. I think we all hope and expect that none of the big Cdn banks will go belly up. It would be catastrophic, and we would not really get all our money back anyway since CDIC doesn't have enough assets as far as I can make out. It's an argument against allowing big banks to swallow each other, along with "too big to fail".
But I don't think it's irrational to expect honest and clear information from all the banks and from CDIC.
1:41 pm
December 23, 2011
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I think it is still prudent to NOT put all your eggs in one basket. But also keep in mind the big 5 have a lot of other investments that are not covered by CDIC ... like a US dollar account....mutual funds....ETF's etc. So maybe the insured portion of their business would survive while the NON CDIC stuff would be our loss.
3:51 pm
October 21, 2013
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Somewhere on this site, there was a thread where the exact coverage was outlined by one of us, as provided by CDIC and MB Deposit, in relation to deposits. Perhaps someone can find it?
My recollection was that MB was slightly better proportion of coverage, but both quite small really.
4:00 pm
October 21, 2013
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see https://www.highinterestsavings.ca/forum/general-comparisons/provincial-deposit-insurance-manitoba-rates-etc/
Research presented here suggests that MB Deposit Corp offers approx. 3 x as much coverage in relation to deposit as does CDIC. If this is correct, it could be argued that MB CUs are safer than banks, ignoring the question of which category is more likely to default. MB says that they have not had a credit union default in a very long time, if ever, which is more than you can say for CDIC-insured institutions.
Personally, I don't think that the fact that MB coverage is "unlimited" makes any difference at all, as such. All that matters is the total of how much they hold on deposit versus how much is held by the Deposit Corp. To put it in simpler terms, what difference does it make if there are 10 account holders, each with a deposit of $1 million, or 1000 account holders, each with a deposit of $10,000, if the bottom line is that the Deposit Corp holds 1% of deposits for a rainy day? It's all proportional, but the guys with the bigger deposits will suffer proportionately more, one presumes. The same thing applies to banks except that there is a ceiling of $100,000, after which you won't be compensated no matter what. It's all about making your own decision about how much you want to deposit in a given institution. All have risks, however low.
I note that one of the MB CUs, I think it might be Steinbach but can't recall precisely, actually discourages very large deposits by offering lower interest rates after a certain ceiling. A bank would never do that!
4:23 pm
December 23, 2011
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Brian said
agree - don't put all your eggs in one basket. Do you think your money would be safer with the Manitoba credit unions with their "unlimited coverage guarantee" on deposits? Is there really enough to cover a major failure/major failures? Would be interested in your opinion?
Hi. I have 3 accounts in MB. Outlook (don't like but will use for my purposes as they make way too many mistakes and their first line of contact is very poor), Accelerate ( I really like their service and products), and Hubert ( I am just not sure about their cumbersome web site ). I used to subscribe to Money magazine and they had experts you could email to as I had no idea what DCGM was, so of course was leery. I was reassured it was safe. But that was only one opinion. As stated above there are more reassurances and I would think if one of the CU's was in trouble they would be absorbed by another one and all would be pretty much transparent to us. I also just joined Oaken and would consider Implicitly and drop Hubert. I would still only do a max of 100000 including interest at maturity with any one of them. I am phasing out Manulife as my advisor is a jack ass and as simple as our portfolios are, with a bit of effort on my behalf, I can do much better and will not have to pay 150x2 per year self directed fees or pay 150 per trade vs 0 or 25 with iTRADE. When I look at who had best GIC rates the institutions I haved picked, by luck only, are always on top of the heap.
And I don't know why...but none of those spin off banks like PC or CT I just can't take seriously. And it appears that some have their products piece mealed.
4:37 pm
April 6, 2013
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Loonie said
Somewhere on this site, there was a thread where the exact coverage was outlined by one of us, as provided by CDIC and MB Deposit, in relation to deposits. Perhaps someone can find it?
My recollection was that MB was slightly better proportion of coverage, but both quite small really.
I did calculate some numbers for CDIC and DGCM in updates on eft? | Page 3 | Implicity Financial | Discussion forum:
CDIC's backing comes from its authority under section 10.1 of the Canada Deposit Insurance Corporation Act to borrow up to $19 billion on behalf of the Government of Canada. In March 2013, CDIC had $2.566 billion in its guarantee fund which is 0.40% of insured deposits. So, the $19 billion of borrowing authority gives CDIC about another 2.96% of insured deposits for a total of 3.36%.
For those who are curious, the CEO of the Deposit Guarantee Corporation of Manitoba writes on page 3 of its 2012 annual report that its guarantee fund is $208 million which is 0.999% of insured deposits.
4:54 pm
October 21, 2013
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Thanks, Norman, for the refresher. It appears then that CDIC really does offer better protection potentially. The system does depend on the banking or CU system remaining basically stable with only the odd renegade going off the rails. I would guess that with the CUs all being much smaller than the big banks, if one of them went bankrupt, it would not require as large a reserve fund to cover the losses. If one of the big banks failed, it would cost a lot more, I presume. So, could this account for why CDIC has more to draw on, i.e. because the institutions they cover are so much bigger?
I'm curious, Norman, as to whether you use the CUs, knowing what you know. Of course you are not obliged to disclose this.
I suppose that if you have enough money, eventually you would run out of banks, at 100,000 each!
5:34 pm
December 12, 2009
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Brian said
That is correct I checked a while ago - $100K is the amount covered by CDIC for your funds with PCF and CIBC taken together. But let's be rational here - do you really think it is high risk to have $125K or $200K etc. with an institution such as CIBC? - I sure don't think it is high risk at all. If I had even $1M in cash, I would have no problem having that with any of the BIG Canadian banks.
Actually, I am still really amazed that the Manitoba Credit Unions provide "UNLIMITED" coverage on your funds with them. I do not believe those credit unions, while doing fine, are as financially strong or as stable as CIBC, Royal, BMO etc.
To me CDIC is advantageous when investing cash with all the smaller banks/institutions, but really not a big deal when investing with CIBC etc.
Agreed. You've hit the "nail on the head," Brian. And, the "Big 5" banks are all designated at least as domestic systemically-important financial institutions (D-SIFIs) meaning they have to have hold even more capital to cover loan losses and bad trades. As we saw in 2008, the government won't let certain institutions fail and these are no different.
CDIC is really more important when you're depositing with smaller institutions, like the Home Trust Company, the Peoples Trust Company, that sort of things. That's when I stick to my $100k limit. With the other banks, it's not an issue (and not just because I don't have much more than $100k in cash!).
CIBC is ranked as the "strongest bank in the world," according to Bloomberg Markets magazine, presumably on capital and ratio of losses to total capital held and other risk management-like metrics. They've gotten this for each of the last two or three years.
Cheers,
Doug
9:27 pm
April 6, 2013
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Loonie said
....I'm curious, Norman, as to whether you use the CUs, knowing what you know. Of course you are not obliged to disclose this.
I suppose that if you have enough money, eventually you would run out of banks, at 100,00 each!
Yes, I do use the Manitoba credit unions.
The deposit insurance guarantee funds are actually the third level of backing for deposits. The first two are (1) the member/shareholder capital and retained earnings of the institution and (2) the regulatory powers of the deposit insurance funds. I wrote the following in an earlier post in that thread:
Yes, the CDIC and DGCM guarantee funds are small compared to total insured deposits. But, they are not small compared to the deposits of many of the institutions.
For example, CDIC-insured institution People Trust had $984.8 million of deposits at the end of 2012. CDIC's $2.566 billion guarantee fund is 261% of People Trust's deposits. Losses from People Trust loaning out its deposits would have to exceed the $114.4 million (11.6% of deposits) from its shareholders and retained earnings before CDIC would have to pay out. CDIC would likely intervene long before their loan losses reached 11.6%.
Sunova, who are behind Hubert Financial, had $822.4 million of deposits at the end of 2012. DGCM's $208 million guarantee fund is 25.3% of those deposits and would need to pay after losses exceed the $61.5 million of member equity (7.48% of deposits). DGCM would likely intervene long before the loan losses reached 7.48%.
10:29 pm
October 21, 2013
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That's reassuring! thanks.
3:44 pm
December 12, 2009
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Brian said
Doug - not sure I would lump Home Trust with Peoples Trust. Home Trust had a net income 10X larger than Peoples - $257M vs $24M and total assets $20B vs $4B. - Peoples for sure is much smaller.
By the way - it is so interesting how so many here in the Forum focus heavily on the deposit guarantees of banks, credit unions etc. while looking for that extra 0.25% but at the same time many of us do invest in shares, mutual funds, ETFs, corporate bonds/debentures and there are NO guarantees on those.
Brian, I thought about that after I posted it. Indeed, Home Trust is fast becoming one of the safer smaller banks in Canada. I'd rank them in the same "peer group" as Canadian Western Bank and HSBC Bank Canada.
Peoples Trust Company is more in the smallest "peer group", along with companies like Alterna Bank, Pacific & Western Bank of Canada and Bridgewater Bank. 
Cheers,
Doug
7:55 am
July 19, 2013
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Try this link for the PC Fin 2% Offer http://preschoicefinancial.tes.....lp-v2.html
1:45 pm
October 21, 2013
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Brian said
Loonie said
"Do it while you can. It's only a matter of time until these banks close these loopholes so that you won't be able to jump around so often. I saw it happen with another kind of website I was involved with. As soon as a substantial number of people saw certain ways of saving money, those avenues were shut down."
What "avenues" were shut down? I would be interested to know the details. Please share.
Thanks
I don't want to get into the details for privacy reasons. It was in the grocery business.
1:47 pm
October 21, 2013
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JW said
Try this link for the PC Fin 2% Offer http://preschoicefinancial.tes.....lp-v2.html
So, if I read this correctly, the offer only applies to registered accounts?
Far too much trouble, seems to me, to move a registered account just for a few months, especially considering it could easily take a month to get it moved.
Looks like they may already be starting to make it less attractive for rate-hoppers.
5:17 pm
July 19, 2013
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Read further ... it starts with Registered Accounts and follows with Non-Registered Accounts. 2% applies to both.
5:26 pm
October 21, 2013
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Oh, I see now. Thanks for the clarification. Looks like rate-hoppers can still take advantage of the offer.
9:04 pm
February 19, 2013
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Interesting they are playing the early cut-off game for balances (July 25 vs July 31 - I pulled ours out on July 28 so not eligible). I guess they don't care about what I have pulled out and moved to Hubert at 1.95% vs their 2%. I haven't spent the time calculating what the difference is given that Hubert pays their interest monthly and so compounds monthly vs the paying of bonus interest in November but it can't be much of a difference. (Anyone spent the time to figured it out?)
Did they think that people with 100k or more in their accounts wouldn't realize what was happening and simply leave their money with them to get 1.35%?
What are they expecting to achieve by these shenanigans? 
12:39 am
October 21, 2013
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It's a Promotion, designed to get new clients. I don't think they are expecting people who are hitting the maximum of CDIC coverage to participate, as those people will likely be more savvy.
I haven't done the math either, but I think you'd probably end up in about the same place with Hubert after 3 months if you had a big deposit to make - and with a lot less fussing around. SD2013 once commented that a differential of .05 was very reasonable when comparing accounts that would pay out annually versus semi-annually versus monthly, such as at Oaken. This is a similar situation.
Please write your comments in the forum.