Canadian Commercial Banks

In comparison to their American counterparts, Canadian commercial banks have adopted more conservative policies toward crediting, and indicators reveal they have steady levels of profitability, good capital ratio, and comparatively high quality of capital. In addition, throughout history, the Canadian banking system was characterized by greater freedom to establish and run branch units, greater lending opportunities and securities investment, and higher leverage. Overall, Canadian commercial banks have been profitable due to the country’s more relaxed regulatory environment. Today’s commercial banking institutions are also called chartered banks and boost a high penetration level of debit cards, phone banking, internet banking, and other methods of electronic banking. In Canada, ATMs per capita is the highest on a global scale.

The typical commercial bank accounts in Canada will pay interest on positive balances and charge interest on negative ones. The customers of Canadian banks may open foreign currency accounts which use currencies different than the Canadian dollar.

The largest commercial banks in Canada are Bank of Nova Scotia, Bank of Montreal, Royal Bank of Canada, Canadian Imperial Bank of Commerce, and the Toronto Dominion Bank. Other commercial banks worth mentioning are HSBC Bank Canada, Pacific & Western Canada, and Alberta Treasury Branches, among others.

Royal Bank of Canada is the largest provider of financial services, offering credit and debit cards, savings accounts, guaranteed investment certificates, retirement savings plans, education savings plans, mutual funds, consumer loans, and mortgage plans, among others. In 2009, the Royal Bank provided advisory services on 56 deals which were worth $71.9 billion. In total, its Capital Markets took a 46.5% share of all mergers and acquisitions in Canada.

As a part of recent development in January, 2010, the Hannuri Law Office in Seoul filed a lawsuit against Royal Bank of Canada, representing two investors. They sought a compensation of $3.2 billion after having lost 25.4 percent of investment in equity securities. Royal Bank spokeswoman Beverly Weber announced that the bank had conducted a comprehensive review and its policy and activities complied with all relevant law and practices.

Toronto Dominion Bank is the sixth largest financial service provider on the North American continent. The bank specializes in investment advisory, wealth management, commercial banking, personal banking, capital market analysis, foreign trade assistance, interest monitoring, and government banking, among others. Toronto Dominion is the second largest Canadian depository entity, with more than $434 billion consolidated assets. Since 1999, its dividends have gone up by 20.50 percent on average. The return on equity stood at 42 percent in 2008 in comparison to lows of 26 percent in 2003. In 2008, TD Bank won the approval of the Federal Reserve Board for the acquisition of banking entities such as Ramsey, Commerce Bancorp, and Commerce Bank/ North, together with approval to acquire interest in Pennsylvania Commerce Bancorp. In 2008, Toronto Dominion Bank was fined GBP7 million by the Financial Services Authority. Control failings regarding the price of financial products force the bank to undertake a negative adjustment worth CDN96 million.

The Bank of Nova Scotia is the third largest Canadian financial and banking service provider. This commercial bank offers a large array of services and products, including checking and saving accounts, telephone and online banking, saving programs, fixed and variable rate mortgages, leasing solutions, personal loans, and lines of credit, among others. In 2008, Bank of Nova Scotia, together with Bank of Beijing, established a fund management entity. Scotiabank owes $15 million or 33 percent of the total shares in the company. The new body, Bank of Beijing Scotiabank Asset Management, specializes in designing and marketing mutual funds which are sold via the Bank of Beijing. In 2009, the bank acquired additional 13.2 percent in Xi’an City Commercial Bank, aiming at further increase to 18.1 percent. Upon completion, the investment will be worth CND162 million. With the acquisition of shares from other sources, the total stake will be close to the 20 percent regulatory limit for foreign banking investments.

The Bank of Montreal is the oldest Canadian bank and the sixth largest provider of financial and banking services. The bank offers various financial products such as credit and debit cards, fixed and variable rate mortgage plans, equity loans, personal loans, credit insurance services, lines of credit, and investment lending, among others. In November 2009, Bank of Montreal announced that its last quarterly profits increased by 16 percent. The bank reported a total net income of $647 mil. The total revenue increased from $176 mil to $2.81 billion in 2008. President Bill Downe stated that reduction in the field of corporate services, tight controls over supplier costs and the level of staffing facilitated further growth. In November, 2009, Bank of Montreal announced the successful acquisition of the franchise Diners Club, formerly owned by Citigroup. Together with the club, the bank acquired its Professional Card portfolio and Rewards program.