1. Introduction to Banking

2. Canadian Banking  Banks are businesses that sell services and make a profit  Money is made by charging and collecting interest on loans, e.g. mortgages  Banks also invest some of the money that customers deposit with them

3. The Bank Act  Passed in 1871  Outlines the rules and regulations that banks must follows  All Canadian banks receive a charter from the federal government Government gives the banks authority to operate Known as “charter” banks

4. Classes of Banks  Canadian banks fall into one of three classes: Schedule I Schedule II Schedule III  The class that the bank belongs to is determined by its ownership

5. Schedule I Banks  Are owned by Canadian shareholders  Shares are traded on major stock exchanges  There are 19 Schedule I banks  Accept deposits from customers and offer investment and financial services e.g. Scotiabank, CIBC

6. Schedule II Banks  Most foreign-owned controlled by a small number of shareholders  Shares are not usually available to the general public  Have the same powers as a Schedule I banks, but the government may set limits on the number of branches and total amount of assets e.g. ING, HSBC

7. Schedule III Banks  Foreign bank branches with permission to operate in Canada  Bank Act sets restrictions  Most concentrate on investment banking and corporate customers e.g. Citibank, Deutsche Bank AG

8. Trust Companies  First established in the late 1800s  Provide many banking services including: Savings and chequing accounts, loans  Also called near banks  Also assist with the sale of real estate, administering estates of deceased persons, maintaining trust accounts for charitable organizations and minors

9. Trust Companies continued…  Not regulated by the Bank Act  Each province and federal government specify the types of investments that these institutions can make with customers’ money

10. Caisses Populaires and Credit Unions  Organized and owned by groups of people who pool and share their resources  Form of co-operative business ownership  Members share a common bond of association e.g. teachers  Belong to the World Council of Credit Unions

11. Caisses Populaires and Credit Unions continued…  Offer a variety of services such as taking deposits, chequing services, investment products, loans  In order to borrow money, you must have savings deposited there

12. Caisses Populaires and Credit Unions continued…  Unique features: Provide services only to members and their families To become a member, must purchase at least one share Members are equal owners regardless of number of shares owned

13. Insurance Companies  Financial institutions that insure risk  Focus on either life and health insurance, or property and car insurance  Individuals and businesses rely on insurance e.g. fire insurance, car insurance in case of an accident  Companies include: Manulife, Sunlife, Economical

14. How Insurance Works  It’s complicated!  Works by using the payments received from policyholders to pay the claims of those who make them  Risk is shared  Many policyholders = millions in premiums  If not needed right away, money can also be put into reserves