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