Banking in Canada
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Banking in Canada began to migrate in earnest from colonial overseas banking operations to a local banking system with the founding of the Bank of Montreal in 1817. Other banks soon followed and began business, and after a lengthy approval process began unregulated banking business. These institutions issued their own local currency until amendments in the Dominion Notes Act  allowed federal and provincial governments to begin to introduce their own notes starting in 1866. Official Canadian currency took the form of the Canadian dollar in 1871, overriding the currency of individual banks. The establishment of the Bank of Canada in 1935 was also an important milestone in banking and monetary governance.
Despite various loss events (such as the Latin American debt crisis, the collapse of Olympia and York, Enron-related liabilities, and the U.S. Subprime mortgage crisis), the big five banks have thus far proven to be safe and stable companies. For example, in securities prospectuses, the Royal Bank of Canada says it has paid a common share dividend in every year since 1870, the year after it received its banking charter.
According to the Department of Finance, two small regional banks failed in the mid-1980s, the only such failures since 1923, which is the year the Home Bank of Canada failed. There were no bank failures during the Great Depression compared to 9000+ in the US.
In the 1980s and 1990s, the largest banks acquired almost all significant trust and brokerage companies in Canada. They also started their own mutual fund and insurance businesses. As a result, Canadian banks broadened out to become supermarkets of financial services. After large bank mergers were ruled out by the federal government, some Canadian banks turned to international expansion, particularly in various U.S. markets such as banking and brokerage.
Canadian banks were lauded for surviving the financial crisis of 2007–2008 without requiring any capital injections from the government. They did participate in liquidity facilities offered both in Canada and the United States.
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In everyday commerce, the banks in Canada are generally referred to in two categories: the five large national banks (the "Big Five") and smaller second-tier banks (notwithstanding that a large national bank and a smaller second-tier bank may share the same legal status and regulatory classification).
The five largest banks in Canada are:
- Royal Bank of Canada (RBC)
- Toronto-Dominion Bank (TD)
- Bank of Nova Scotia (Scotiabank)
- Bank of Montreal (BMO)
- Canadian Imperial Bank of Commerce (CIBC)
- Bordo, Michael D.; Redish, Angela; Rockoff, Hugh (2014). "Why didn't Canada have a banking crisis in 2008 (or in 1930, or 1907, or …)?". The Economic History Review. 68 (1): 218–243. doi:10.1111/1468-0289.665.
- Financial Institutions and Markets, Department of Finance, URL accessed 6 August 2006