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Big Five (banks)

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Title: Big Five (banks)  
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Subject: Scotiabank, Royal Bank of Canada, Canadian Imperial Bank of Commerce, Toronto-Dominion Bank, Toronto
Collection: Banking in Canada, Banking Terms, Banks of Canada
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Big Five (banks)

Big Five is the name colloquially given to the five largest banks that dominate the banking industry of Canada. All five banks (see table below) are operationally based in Toronto.[1][2] All five banks are classified as Schedule I banks that are domestic banks operating in Canada under government charter. The banks' shares are widely held, with any entity allowed to hold a maximum of twenty percent.[3]

According to Bloomberg, in 2011, the big five dominate the world's twenty strongest $100-billion-asset banks, with Canadian Imperial Bank of Commerce, Toronto-Dominion Bank, Royal Bank of Canada and Bank of Nova Scotia at 3rd, 4th, 6th and 18th place, respectively, while non-big five National Bank of Canada sits at 5th place.[4]

Contents

  • Overview 1
  • Other large Canadian banks 2
  • Proposed mergers 3
    • Potential foreign forays 3.1
    • Banking regulation 3.2
  • See also 4
  • References 5

Overview

The Big Five banks, listed in order of market capitalization on the Toronto Stock Exchange as of December 31, 2011, with their current corporate brand names and corporate profiles according to their latest annual report, all monetary amounts are in billions of Canadian dollars, are:

Official names Bank brand Operational head office Legal incorporation Assets Deposits Capitalization Branches
(Canada only)
Employees
(Full-time equivalent)
Reference
Royal Bank of Canada RBC Royal Bank Royal Bank Plaza, Toronto and place Ville-Marie Montreal[5] Halifax[6] $860.8 $558.4 $73.0 1,372 74,247 [7]
Toronto-Dominion Bank TD Canada Trust Toronto-Dominion Centre, Toronto[8] Toronto[8] $977.4 $543.4 $88.37 2,600 85,000 [9][10]
Bank of Nova Scotia Scotiabank (full-service)
Tangerine (direct)
Scotia Plaza, Toronto[11] Halifax[11] $743.8 $514.9 $76.6 1,040 83,000 [12]
Bank of Montreal BMO Bank of Montreal First Canadian Place, Toronto and St. Jaques street Montreal[13] Montreal[13] $477.4 $302.9 $34.8 920 47,180 [14]
Canadian Imperial Bank of Commerce CIBC (full-service)
President's Choice Financial[n 1] (direct)
Commerce Court, Toronto[15] Toronto[15] $353.7 $255.4 $28.3 1,100 42,239 [16]
  1. ^ Joint venture with supermarket operator Loblaw Companies. Figures here only include PC Financial products issued by CIBC; some PC Financial products (such as credit cards) are provided directly by subsidiaries of Loblaw.

In modern history, Royal Bank has always been the largest by a significant margin.[17] Up to the late 1990s, CIBC was the second largest,[18] followed by Bank of Montreal, Scotiabank, and TD Bank.[19] During the late 1990s and beyond, this ranking changed due to several reorganizations. Royal Bank acquired Royal Trust in 1993,[20][21] while Scotiabank purchased National Trust in 1997. As Scotiabank found no merger partners among the other banks in the big five group, it instead expanded its international operations and passed the Bank of Montreal in size. TD Bank merged with Canada Trust, which was for a long time the largest trust in Canada, thus vaulting TD temporarily into the number two spot.[22] While there were no major changes to Bank of Montreal, CIBC's first unsuccessful foray into the US market led it to shed its assets there, dropping it to the number five spot.[23]

Other large Canadian banks

All monetary amounts are in billions C$.

Official names Operational head office Assets Deposits Capitalization Branches
(Canada only)
Employees
(Full-time equivalent)
Reference
National Bank of Canada Montreal $156.3 $87.1 $11.8 448 20,100 [24]
HSBC Bank Canada Vancouver $80.0 $46.6 145 6,000 [25]
Laurentian Bank of Canada Montreal $24.5 $20.1 $1.0 158 3,700 [26]
Churchill Investments Group Montreal $22.6 $19.3 $14.6 12 1,100 [27]
Canadian Western Bank Edmonton $14.8 $12.5 $2.0 40 1,796 [28]
ATB Financial Edmonton $12.8 $12.0 $1.9 57 5,905

Proposed mergers

In 1998, the Bank of Montreal proposed a merger with Royal Bank around the same time that CIBC proposed to combine with the Toronto-Dominion Bank.[20] The banks argued that these mergers would enable them to compete globally with other financial institutions.[29] This would have left Canada with only three major national banks. The mergers were reviewed by the Competition Bureau of Canada, which declared that negative effects (such as higher user fees and local branch closures) from the mergers would far outweigh the benefits of allowing the mergers. Ultimately, it was then Finance Minister Paul Martin who rejected both proposed mergers.[30][31] The issue since has not been revisited by succeeding Finance Ministers; it has been cited as a reason that the Canadian economy easily weathered the 2007 subprime mortgage financial crisis compared to other nations, and the aforementioned recognition of numerous Canadian banks on the Bloomberg 2011 list of twenty strongest large banks in the world.[4][32]

Potential foreign forays

The weakness of the Canadian dollar and high U.S. bank stock prices were commonly cited as obstacles to purchasing assets south of the border. However the 2007 subprime mortgage crisis reversed this trend. In the aftermath of the crisis, the Canadian dollar steadily climbed against the U.S. dollar, achieving parity in early 2008 and trading as high as 30 cents above the USD in late 2008. The strength of the Canadian dollar and the relative weakness of U.S. bank prices have led commentators to suggest that the big five banks could consider an expansion into the United States.

Because of the recent recession, Royal Bank of Canada has now eclipsed

  1. ^ Hazel Duffy (2004). Competitive Cities: Succeeding in the Global Economy. Taylor & Francis. p. 154.  
  2. ^ Keith Dinnie (2011). City Branding: Theory and Cases. Palgrave Macmillan. p. 21.  
  3. ^ "Bank Act - Part VII: Ownership of Banks". 
  4. ^ a b Alexander, Doug; Pasternak, Sean B. (May 3, 2012). "Canadians Dominate World's 10 Strongest Banks".  
  5. ^ "Royal Bank of Canada: Annual Report 2010" (PDF). RBC. 2013. Retrieved February 1, 2014. 
  6. ^ Yusufali, Sasha. "Royal Bank of Canada" (PDF). Royal Bank of Canada. Retrieved February 1, 2014. 
  7. ^ "RBC Annual Report 2011" (PDF). Retrieved August 26, 2013. 
  8. ^ a b "2013 Annual Report: Note 1" (PDF). TD Bank Group. Retrieved 2014-05-19. 
  9. ^ "TD Annual Report 2011: Management's Discussion and Analysis" (PDF). Retrieved July 17, 2013. 
  10. ^ "TD Annual Report 2011: Consolidated Financial Statements" (PDF). Retrieved July 17, 2013. 
  11. ^ a b Ian Bushnell (2013). The Federal Court of Canada: A History, 1875-1992 (PDF). Scotiabank. p. 278.  
  12. ^ "2011 Scotiabank Annual Report" (PDF). November 2, 2011. Retrieved 2014-05-19. 
  13. ^ a b Christopher Kennedy (August 9, 2011). Evolution of Great world Cities: Urban Wealth and Economic Growth. University of Toronto Press. p. 168.  
  14. ^ "BMO Annual Report 2011" (PDF). Retrieved July 17, 2013. 
  15. ^ a b Mike Filey (2002). A Toronto Album 2: More Glimpses of the City That Was. Dundurn. p. 83.  
  16. ^ "CIBC Annual Report 2011" (PDF). Retrieved July 17, 2013. 
  17. ^ Hayton, James; Biron, Michal; Christiansen, Liza Castro Castro; Kuvaas, Bård (2012). Global Human Resource Management Casebook. CRC Press. p. 581.  
  18. ^ Jones, Steven D.; Beyerlein, Michael M.; Phillips, Jack J. (1998). Developing High-Performance Work Teams. American Society for Training and Development. p. 57.  
  19. ^ Wesson, Thomas James (2007). Canada and the New World Economic Order: Strategic Briefings for Canadian Enterprise. Captus Press. p. 307.  
  20. ^ a b Clement, Wallace; Vosko, Leah F. (2003). Changing Canada: Political Economy as Transformation. McGill-Queen's Press.  
  21. ^ Clement & Vosko 2007, pp. 250-251.
  22. ^ Clement & Vosko 2007, p. 250.
  23. ^ Robertson, Grant (April 25, 2013). "CIBC re-enters U.S., after being badly burned before".  
  24. ^ "BNC Annual Report 2011" (PDF). Retrieved July 17, 2013. 
  25. ^ "HSBC Annual Report and Accounts 2011" (PDF). HSBC Canada. December 31, 2011. Retrieved 2014-05-19. 
  26. ^ "2011 Annual Report" (PDF). Laurentian Bank. October 31, 2011. Retrieved 2014-05-19. 
  27. ^ "The Richest Banks in Canada". TheRichest. 4 February 2013. Retrieved 2014-05-29. 
  28. ^ "Canadian Western Bank Group 2011 Annual Report" (PDF). Canadian Western Bank Group. October 31, 2011. Retrieved 2014-05-19. 
  29. ^ Hill, Charles W. L.; Richardson, Tim; McKaig, Thomas (2006). Global Business Today. McGraw-Hill Ryerson. p. 424.  
  30. ^ Trent, Peter F. (2012). Merger Delusion. McGill-Queen's Press. p. 539.  
  31. ^ "Canadian Bank Mergers Decision 1998". Canadaonline.about.com. July 13, 2013. Retrieved July 17, 2013. 
  32. ^ Stodgy' financial planning kept Canada in the black"'".  
  33. ^ http://www.theglobeandmail.com/report-on-business/the-snowbirds-of-bay-street/article1088508/
  34. ^ reportonbusiness.com: Purchase this article
  35. ^ "TD Bank Financial completes Commerce Bank buy".  
  36. ^ "Commerce Bank name to vanish, replaced by TD Bank".  
  37. ^ Battram, Robert A. (2010). Canada in Crisis (2): An Agenda for Survival of the Nation. Trafford Publishing. p. 400.  
  38. ^ Canada: Report on the Observance of Standards and Codes--Data Module, Response by the Authorities, and Detailed Assessments Using Data Quality Assessment Framework. International Monetary Fund. October 2003. p. 131. GGKEY:7K0G04ZL1HJ. 
  39. ^ "Bank of Canada Act". Laws-lois.justice.gc.ca. Retrieved August 27, 2013. 

References

See also

The main federal statute for the incorporation and regulation of banks, or chartered banks, is the Bank Act (S.C. 1991, c.46), where Schedules I, II and III of this Act list all banks permitted to operate in Canada under these three distinct categories.[39]

Canada's federal government has sole jurisdiction for banks according to the Canadian Constitution, specifically Section 91(15) of The Constitution Act, 1867 (30 & 31 Victoria, c.3 (UK)), formerly known as the British North America Act, 1867.[37] Meanwhile, credit unions/caisses populaires, securities dealers and mutual funds are largely regulated by provincial governments.[38]

Banking regulation

In October 2007, TD purchased Commerce Bancorp, a medium-sized US bank with a strong branch network in the middle Atlantic and Florida. As of March 2008, their stated plan was to merge Commerce with their existing TD Banknorth subsidiary, calling the new bank TD Commerce Bank.[35] However, Commerce Bank based in Worcester, Massachusetts challenged the new name. As a result, TD renamed its US banks TD Bank at end of 2009.[36] TD is the sixth-largest bank by branch network in North America, after JPMorgan, Bank of America, Wells Fargo, PNC, and US Bank. It is also the largest foreign bank in the United States holding almost $200 billion (USD) in deposits.

The last time the U.S. financial markets were weak, many Canadian bank CEOs were criticized for not making a more concerted buying effort. Some believed that these CEOs preferred to wait for Ottawa to allow domestic mergers before expanding into the US. The federal government ended up refusing to allow the mergers and is unlikely to do so now. Analysts also pointed out that Canadian banks have much stronger balance sheets today than they did 10 or 15 years ago, putting them in an even better position to be aggressive.[34]

[33]

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