Protecting your hard-earned dollars.

It has been a couple of weeks since the collapse of Silicon Valley bank (SVB) and the global economy is still feeling the rippling effect. With all this commotion south of the border, the fundamental question of concern has become what this means for Canadians. Luckily, we have far stricter regulations and several independent Crown corporations whose sole purpose is to ensure the stability of our banks and financial institutions. Here is what you need to know about the institutions that are protecting the hard-earned dollars of every Canadian.

The Office of the Superintendent of Financial Institutions (OFSI)

The OFSI is an independent federally regulated agency that regulates and supervises over 400 federally regulated financial institutions, including banks, insurance companies, and private pension plans. The organization ensures that these entities maintain a high level of financial and operational stability. Earlier this month, when the news broke of SVBs collapse, The Superintendent of Financial Institutions took additional action to protect creditors of the Silicon Valley Bank’s Canadian branch by taking permanent control of its assets. Here are some of the key functions of the OFSI:

Regulation and Supervision

The OSFI develops and enforces regulations, guidelines, and supervisory processes to monitor the financial stability of institutions. It sets minimum capital requirements, assesses risk management practices, and ensures compliance with relevant legislation.

Early Intervention

The OSFI identifies potential risks and vulnerabilities in the financial system by closely monitoring economic trends, market developments, and financial institutions' performance. By intervening early, OSF minimizes the impact of financial shocks and protects depositors, policyholders, and pension plan beneficiaries.

Crisis Management

in the event of a financial crisis, OSFI works closely with the Department of Finance, the Bank of Canada, and other regulatory agencies to develop and implement appropriate strategies and actions to stabilize the financial system.

The Canadian Deposit Insurance Corporation

The Canadian Deposit Insurance Corporation (CDIC)  is a federal crown cooperation that was created to protect the savings of all Canadians and promote financial stability. The CDIC accomplishes this by safeguarding eligible deposits at more than 80 member institutions, some of the key features of the CDIC are:

Deposit Insurance

The CDIC covers eligible deposits up to CAD 100,000 per insured category in each member institution. Eligible deposits include savings and chequing accounts, term deposits, and guaranteed investment certificates (GICs) with maturities of five years or less.

Member Institutions

The CDIC membership comprises banks, trust and loan companies, associations governed by the Cooperative Credit Associations Act, and federally regulated credit unions. Investors can verify if their financial institution is a CDIC member by looking for the CDIC logo on their bank's website or at its physical branches.

Resolution Tools

The CDIC has various resolution tools at its disposal to manage a failing member institution. These tools may include transferring deposits to a solvent institution, liquidation, or establishing a bridge institution to maintain critical functions.

The last word

As the Canadian and global financial landscape continues to evolve, it is essential for investors to be well-informed about the regulatory organizations that oversee the safety and stability of our country's banking system. In conclusion, we have little to worry about, the prospect of a bank failure in Canada is extremely unlikely due to the strict regulatory environment.

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- Mitchell Cathcart,  Marketing Assistant, Kondwelani Kalinda, Licensed Assistant & Financial Planning Associate and Grant White, Portfolio Manager at Endeavour Wealth Management with iA Private Wealth, an award-winning office as recognized by the Carson Group. Together, Endeavour Wealth Management provides comprehensive wealth management planning for business owners, professionals and individual families.

This information has been prepared by Mitchell Cathcart Marketing Assistant, Kondwelani Kalinda, Licensed Assistant& Financial Planning Associate and Grant White, Portfolio Manager for iA Private Wealth and does not necessarily reflect the opinion of iA Private Wealth. The information contained in this newsletter comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any of the securities mentioned. The information contained herein may not apply to all types of investors. The Investment Advisor can open accounts only in the provinces in which they are registered.  

iA Private Wealth Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. iA Private Wealth is a trademark and business name under which iA Private Wealth Inc. operates.

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