Area of Law: Financial Institutions
Answer # 1251
Deposit-taking institutions: Banks, trust companies, credit unionsRegion: Ontario Answer # 1251
Banks, trust companies and credit unions are all types of deposit-taking institutions.
Banks are federally incorporated and are regulated by the federal Bank Act. The following banks, known as the Big Five, are the five largest banks in Canada:
- The Bank of Montreal (BMO)
- The Bank of Nova Scotia (Scotiabank)
- The Canadian Imperial Bank of Commerce (CIBC)
- The Royal Bank of Canada (RBC)
- Toronto-Dominion Bank (TD)
The types of services offered may include:
- personal checking and savings accounts
- business accounts
- loans, including: personal, home equity, lines of credit and business loans
- business accounts
- credit cards
- investments, such as mutual funds and other securities
- financial management services
- safe deposit boxes
Trust companies and credit unions are types of banking institutions in that they offer various banking services.
There are differences between banks and trust companies. Unlike banks, trust companies can administer estates, trusts, and pension plans. Banks cannot conduct these activities unless they are done through a separately created trust subsidiary.
Trust companies can be incorporated and regulated at either the federal or the provincial level. While banks have full commercial lending powers, in order for a trust company to provide loans, it must have more than $25 million of regulatory capital, as well as approval of the Office of the Superintendent of Financial Institutions (OSFI).
Credit unions are different from banks and trust companies in that they are fully provincially regulated (by provincial ministries of finance, the Credit Union Central and the provincial deposit insurance corporation). Credit unions offer many of the same financial services as banks, however, generally only a member of the credit union can use its services. Credit unions may have a broader range of loan and savings products at a lower cost to their members than other banking institutions. For more information, refer to the Office of the Superintendent of Financial Institutions (OSFI).
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