1 Banking Economics 120. Canadian Chartered Banks Chartered bank – term used to describe a financial institution operating under the authority of Parliament.

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Presentation transcript:

1 Banking Economics 120

Canadian Chartered Banks Chartered bank – term used to describe a financial institution operating under the authority of Parliament that accepts deposits and lends money to businesses, government, and households

Types of Deposits Chequing account – demand deposit (your money is available to you on demand). Often carries a monthly fee and pays a low (or no) rate of interest Savings account – higher rate of interest than the chequing account and is intended for short-term savings

Types of Deposits Term deposits – depositor leaves the money with the bank for a fixed amount of time. Range from 1 day to 5 years, minimum investment usually $1000 Guaranteed investment certificates (GICs) – depositor leaves the money with the bank for a fixed term, minimum deposit is usually $5000, higher rate of interest than term deposits

Types of Deposits Mutual funds - professionally-managed form of collective investments that pools money from many investors and invests it in stocks, bonds, short-term money market instruments, and/or other securities.

Canadian Banks vs US Banks The system in Canada is referred to as branch banking.  Branch banking – a system of banking in which a commercial bank is allowed to operate branches of the main bank. In Canada there are 8 domestic chartered banks. Foreign banks are allowed to operate in Canada, but they are not allowed to have an extensive system of branches like Canadian banks.

Canadian Banks vs US Banks The system in the USA is unit-banking.  Unit banking – the system in which commercial banks are either not allowed to operate branches or allowed to operate only a limited number. There are no banks with offices all across the country. Some banks regulated by federal law; others regulated by state law. Some states allow branches, but they are usually within a restricted area. The U.S. has more than commercial banks.

Asset Rank 2006 Bank Country (Year End) Assets ($millions CDN) 1UBSSwitzerland(12/06)2,288,498 2Barclays BankU.K. (12/06)2,280,243 3BNP ParibasFrance (12/06)2,210,498 4CitigroupU.S. (12/06)2,193,743 5HSBC HoldingsU.K. (12/06)2,168,341 6Credit Agricole GroupFrance (12/06)2,118,913 7Royal Bank of ScotlandU.K. (12/06)1,993,482 8 Mitsubishi UFJ Financial Group Japan (03/07)1,840,463 9Deutsche BankGermany(12/06)1,728,429 10Bank of America CorpU.S. (12/06)1,701,032 40Royal Bank of CanadaCanada(10/06)557,147 47Toronto-Dominion BankCanada(10/06)407,822 49ScotiabankCanada(10/06)393,387 56Bank of MontrealCanada(10/06)324,622 58CIBCCanada(10/06)315, Desjardins GroupCanada(12/06)135, National Bank of CanadaCanada(10/06)117,454