Banking
How do Canadians Bank?
■ Online/
Internet banking
■ ATM/ ABM bank machines
■ Telephone banking
■ Branches
■ Mobile banking
Banks Offer what Services?
Mortgages
■ Loans
■ Line of credit
■ Bank accounts
■ Investments – mutual funds
■
Banks Offer What Services?
■
Bank accounts – Transaction Accounts
Savings
■ Chequing
■ US funds
■ Student/Youth
■ Joint
■
How do banks make money?
■
Interest from loans and credit cards
■
Lending out depositors money
■
Charging for services
The Bank of Canada
Loans money to Chartered Banks
■ Bank Rate is the minimum interest it
charges to lend money
■ The rate Chartered Banks charge to
clients follows the Bank Rate
■ Bank rate reduces or increases supply
of money in the economy (regulating
supply)
■
The Bank Act
Federal government has control over
money and banking (regulators)
■ Bank Act rules and regulations that
banks have to follow
■ To be a bank have to apply for a charter
from federal government
■ 3 classes of banks
■
Types of Financial Institutions
■
Banks
Schedule I
■ Schedule II
■ Schedule III
■
Trust Companies
■ Credit Unions
■ Insurance Companies
■
Schedule I
■
Owned by Canadian Shareholders
■
Shares traded on major exchanges
■
Accepts deposits, offer investment &
financial services
■
Think Big Five
Schedule II
■
Mostly foreign-owned banks
■
Typically not traded publicly
■
Federal government limits number of
branches and assets can hold
Schedule III
■
Foreign bank branches given
permission to operate in Canada
■
Concentrate on investment banking and
corporate customers
Trust Companies
■
Provide most of the services offered by
banks
■
Also assist in purchase of real estate,
accounts “in trust”; i.e. charities, minors
■
The provincial governments regulate the
“near banks”
Credit Unions
Organized and owned by groups of
people who agree to pool and share
their resources
■ Common bond of association; i.e.
profession, employment, geography
■ Focused on individuals not corporations
■ Must own 1 share, each member has
only 1 vote
■
Insurance Companies
Life & health insurance
■ Car & property insurance
■ Shares risk out amongst clients
■
■
Clients payments pooled and available to
deal with accidents that occur
CDIC
■
Canadian Deposit Insurance
Corporation (CDIC) is an agency of the
federal government
■
Automatically insures deposits in
financial institutions up to $100,000