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  1. 1. The Banking Sector in Canada Group 12 Anil Turken Richard Gauthier Ilhan Osman Nazem Habash Sossy Assadourian
  2. 2. Financial institutions attempt <ul><li>to build long term relationships with their customers </li></ul><ul><li>try to maintain a good and loyal reputation for the public eye </li></ul>
  3. 3. Definition of a bank <ul><li>A business that provides financial services, acts as a holder of money for individuals and businesses, it is a medium of exchange of foreign currencies, and they provide lending and investing instruments along with financial advice. </li></ul>
  4. 4. Chartered banks provide these services in three different areas: <ul><li>Personal finances </li></ul><ul><li>Small business banking </li></ul><ul><li>Corporate and institutional banking </li></ul>
  5. 5. <ul><li>Personal finance services include: </li></ul><ul><ul><li>means of saving </li></ul></ul><ul><ul><li>investing </li></ul></ul><ul><ul><li>Borrowing </li></ul></ul><ul><ul><li>Financial planning and advice </li></ul></ul><ul><li>For businesses, they provide the same types of products and financial solutions to help their clients manage their small business’s needs. </li></ul><ul><li>For their corporate, government and institutional clients; </li></ul><ul><li>- They aid them in capital raising, </li></ul><ul><li>- Investing, </li></ul><ul><li>- Advisory and market research. </li></ul>
  6. 6. Examples of chartered banks in Canada <ul><li>The Bank of Montreal </li></ul><ul><li>The Toronto Dominion Bank </li></ul><ul><li>The Bank of Nova Scotia </li></ul><ul><li>The Royal Bank of Canada. </li></ul>
  7. 7. Bank of Canada Act
  8. 8. Origins of Banking System <ul><li>First chartered Bank </li></ul><ul><li>Bank of Montreal 1817 </li></ul><ul><li>Canadian Bankers Association </li></ul><ul><li>Bank Act of 1900 </li></ul>
  9. 9. Foreign Banks in Canada <ul><li>The first class is composed of financial institutions in which no single shareholder can exceed 10% of the voting shares </li></ul><ul><li>The second class is made up of financial institutions in which individuals can hold more than 10% of shares. </li></ul>
  10. 10. Critique of “protectionism” <ul><li>Richard J. Ross, who was the vice president of Corporate Banking at Hong Kong Bank of Canada , in 1992 stated, “ For a foreign bank, competing in Canada is like being David against Goliath, only in this version you have no stone, no sling, one arm is tied behind you, and you must fight from a two foot deep hole.” </li></ul>
  11. 11. History of Banking
  12. 12. The History of the Bank of Canada The situation before the creation of Bank of Canada: - A few banks, each bank had many branches. - Each bank issued his own bank notes. -The government did not have much control over the banks. -The situation remained like this for a long time.
  13. 13. What were the reasons for creating the bank of Canada? <ul><li>The great depression in 1930s. </li></ul><ul><li>Each bank acting in it’s own interest. </li></ul><ul><li>The growing number of banks. </li></ul>
  14. 14. The creation of the Bank: <ul><li>1913 - First try to establish bank failed. </li></ul><ul><li>1933 - A commission studied the general situation. </li></ul><ul><li>1935 - Finally, the bank was established. </li></ul>
  15. 15. Objectives of Bank of Canada <ul><li>Keep inflation low and stable. </li></ul><ul><li>Long-lasting growth. </li></ul><ul><li>Job Creation. </li></ul><ul><li>Prevent “boom and bust” cycles. </li></ul>
  16. 16. How does the bank do it? <ul><li>Monetary policies: Adjusting inflation-control target. </li></ul><ul><li>Ranges between 1 – 3 %. </li></ul><ul><li>Adjusting the target influences interest rates and exchange price of Canadian dollar. </li></ul>
  17. 17. Government Programs That stimulated economic growth through the Canadian Banking system
  18. 18. Canadian governmental programs <ul><li>C.M.H.C Canadian Mortgage & Housing Corporation </li></ul><ul><li>C.D.I.C Canadian Deposit Insurance Corporation </li></ul>
  19. 19. Canadian Mortgage & Housing Corporation <ul><li>Established by the Federal Government in 1946. </li></ul><ul><li>Primarily designed to build low cost housing. </li></ul><ul><li>It’s Focus shifted in mid 70’s and enhanced its mortgage insurance program. </li></ul><ul><li>The insurance Increased individuals purchasing power by allowing lower down payments on the purchasing of a home. </li></ul>
  20. 20. Mortgage Insurance <ul><li>Maximum a bank will lend an individual is 75% Ltv of the property. </li></ul><ul><li>If individuals do not meet this minimum cash down they must take the CMHC mortgage insurance. </li></ul><ul><li>The insurance covers the bank from any loses that may incur, such as bankruptcies. </li></ul><ul><li>The insurance premium to the CMHC that ranges from 0.5% to 3.25% </li></ul><ul><li>Insurance premium is a one lump sum payment. </li></ul>
  21. 21. CMHC Contribution to the Canadian Financial System <ul><li>Increased the number of individuals that can purchase homes in Canada. </li></ul><ul><li>Due to rising prices of homes. (Finance needs) </li></ul><ul><li>Due to individuals questionable credit. </li></ul><ul><li>CMHC guaranteed more than $234 billion in Canada Mortgages 2003. </li></ul>
  22. 22. Canadian Deposit Insurance Corporation <ul><li>Federal Crown Corporation created in 1967. </li></ul><ul><li>Provides deposit insurance at member institutions. </li></ul><ul><li>Contributes to the stability of Canada's financial system. </li></ul>
  23. 23. What the CDIC Does <ul><li>Reimburses depositors for the amount of their insured deposits. </li></ul><ul><li>Covers up to a maximum of $60,000 per depositor. </li></ul><ul><li>1- TD Mortgage Corporation. </li></ul><ul><li>2- TD Pacific Mortgage Corporation. </li></ul><ul><li>3- The Toronto Dominion Bank. </li></ul><ul><li>Pays out when a member institution fails. </li></ul><ul><li>This eliminates doubts and concerns about ones money held in their accounts. </li></ul>
  24. 24. External Economic benefits produced by the Canadian financial system or chartered banks. <ul><li>TD Bank Financial Group 2003 </li></ul><ul><li>1.15 billion in income and capital gains taxes paid </li></ul><ul><li>24.5 million in charitable donations. </li></ul><ul><li>1- Operation enfant soleil. </li></ul><ul><li>2- Children’s Hospitals. </li></ul><ul><li>3- Scholarships . </li></ul><ul><li>3.2 million in environmental donations. </li></ul><ul><li>1- Friends of the environment. </li></ul><ul><li>2- Environment education & research. </li></ul><ul><li>42,500 employees across Canada with a total of 3.8 billion in salaries. </li></ul>
  25. 25. Future of Banking in Canada
  26. 26. The important days <ul><li>Beginning of 1960 & 1970 the was the first credit card introduced and also ABM launched. </li></ul><ul><li>Then end of 1977 & 1986 as the technology advances peoples has the chance to do there own direct deposit of paycheques, national interact ABM network. </li></ul><ul><li>1997 & 1998 full taking ABM; Internet banking, telephone banking-to-B Internet postal, email payment bills…. </li></ul>
  27. 27. The old technology <ul><li>20 & 30 years ago there were not such as computer use tech in the banking environment. All banking services used to be done manually. </li></ul><ul><li>Ex: opening an account, every personal information or detail was done by hand, also not to forget that by the end of their shift they had to count every single money and papers written. </li></ul>
  28. 28. The new technology <ul><li>Canadians banking has improved for many reasons, up till now their new technology saved more time and more money about 60 to 70 %. The Canadians government banking has no more reason to higher more employees, thanks to their technology use all around the world. </li></ul>
  29. 29. How much the bank saves since 1998 <ul><li>More then 60% of their clienteles have been using Internet banking, telephone banking, ABM banking, most of those people are very busy to come to see a tellers or they don’t have the availability during the time the banks are opened. </li></ul>
  30. 30. Check out our website for more information