Is Tangerine a sound bank? | Tangerine Bank | Discussion forum

There's zero bail-in risk. The bail-in resolution tool is restricted by CDIC Act 39.13 (1.2) to the domestic systemically-important banks (D-SIB's) only.

Tangerine Bank is not one of the six D-SIB's:

1. Bank of Montreal,
2. Bank of Nova Scotia,
3. Canadian Imperial Bank of Commerce,
4. National Bank of Canada,
5. Royal Bank of Canada, and
6. Toronto-Dominion Bank

There are no current debt ratings for Tangerine Bank.

The DBRS ratings for it were discontinued in September 2013 while it was still named ING Bank of Canada and shortly after ING Group reached an agreement to sell it for $3.1 billion to Scotiabank.

Tangerine Bank's lack of a rating is in stark contrast to its Scotiabank siblings ADS Canadian Bank, Montreal Trust Company of Canada, National Trust Company, and Scotia Mortgage Corporation, which all have a AA DBRS debt rating.

I do not have access to the full detailed DBRS report for Bank of Nova Scotia. The full reports are not free.

DBRS does provide access to a summary and the ratings for free in the press release for the report: DBRS Morningstar Confirms The Bank of Nova Scotia at AA with Stable Trends (April 19, 2023)

I know they are not free. Scotiabank reports Tangerine results (a wholly owned subsidiary) as part of its annual report. Tangerine does not issue a separate accounting report. I am guessing DBRS report for Scotiabank includes Tangerine but neither of us knows for sure.

mordko said
I know they are not free. Scotiabank reports Tangerine results (a wholly owned subsidiary) as part of its annual report. Tangerine does not issue a separate accounting report. I am guessing DBRS report for Scotiabank includes Tangerine but neither of us knows for sure.

The full DBRS report does not include Tangerine Bank. If it did, Tangerine Bank and its DBRS ratings would appear in the press release.

Including Tangerine Bank in Scotiabank's annual report means nothing. Producing a consolidated financial statement is just a reporting exercise. The accounting consolidation does not consolidate the entities legally to make liabilities of the subsidiaries somehow liabilities of the parent and liabilities of the parent somehow liabilities of the subsidiaries.

One can see that it doesn't in corporate families like that of Equitable Bank. Equitable Bank and its sibling Concentra Bank have a DBRS rating of BBB(high). Yet, their parent EQB Inc. has a lower rating of BBB.

It's nothing for people who are staying within the CDIC insurance limits.

It's not nothing for people who are eyeing that targeted recent 5½% offer and wondering if they should take Tangerine up on the offer's $1 million limit.

Ive gone way over CDIC limit with Tangerine on my last offer, I feel confident doing so and have been doing it for years. I never lose sleep with Tangerine, but you have to do what youre comfortable with, id say its not worth the extra interest if it stresses you.

I would be a lot more worried if Tangerine was still owned by ING.

The situation was better when it was owned by ING Bank N.V. because there was a DBRS rating and the amount of risk was quantified.

ING Bank of Canada had a DBRS debt rating of A(high) back then. Estimated risk was around that of Province of Newfoundland bonds, which had a rating of A then.

Now, there's no rating. Unrated makes uninsured Tangerine deposits equivalent to junk bonds.

5½% is not adequate right now for junk bonds. That's only about ½% more than the 5.055% one could get today from 52-day TD Bank Bankers' Acceptances offered by BMO InvestorLine. The BA's are guaranteed by TD Bank with a DBRS debt rating of AA(high).

AdrenalineTrade said
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Could the fact that they are offering such a decent rate indicate that they could be trying to raise liquidity?

Not likely. If they needed liquidity, Tangerine Bank would offer the 5½% rate to everyone and require it to be something for something like a 30-day term deposit that can't be withdrawn on a day's notice.

These unpublished promotional rates are more likely marketing exercise to generate marketing attention, like a football game ad.