How do Canadians Bank?
■ Online/
Internet banking
■ ATM/ ABM bank machines
■ Telephone banking
■ Branches
■ Mobile banking
Banks Offer what Services?
■ Loans
■ Line of credit
■ Bank accounts
■ Investments – mutual funds
Banks Offer What Services?
Bank accounts – Transaction Accounts
■ 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
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
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
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
Canadian Deposit Insurance
Corporation (CDIC) is an agency of the
federal government
Automatically insures deposits in
financial institutions up to $100,000