Are Canadian Banks INSOLVENT? If People Withdrew Their MONEY, Is It GAME OVER!?
I thought I should take a quick look at Canada's solid banks to see how well they might fare if 20% of their deposits was withdrawn in one day. It shows that they would have to close quite fast as they have 90% or less of the deposits available in cash.
To elaborate on why that looks at how fractional reserve banking works! Out of a $100 deposit, the banks can through fractional reserve lending create $1000 now what is the $100 in a percentage of $1000? 90% and that entails that the Canadian banks are way beyond fractional reserve lending. They use what the Bank of Canada calls a zero reserve policy https://www.bankofcanada.ca/1997/04/working-paper-1997-8/ which I mention in my latest book on the Canadian economy: https://www.amazon.ca/Canada-Greatest-Economy-World-Yourself-ebook/dp/B073V5R72H
With Canadian banks looked upon as some of the strongest in the world. I wanted to show you how they operate and don't have any of their liabilities your deposit available for withdrawal if 10% or more took out their deposits at once. It would create a bank run which has happened 1000's of times throughout history and the movie It's A Wonderful Life gives us a tale of how a bank run starts and how they can and most likely will bankrupt the bank as their scheme is exposed!
Below is an expose of the bank's holdings pulled from their most recent available balance sheets!
RBC Deposits:
$647,516,000,000
RBC Cash on Hand:
$28,407,000,000
Cash To Deposit Ratio:
95.61% of Deposits not covered
http://www.rbc.com/investorrelations/pdf/ar_2017_e.pdf
TD Bank Deposits:
$886,880,000,000
TD Bank Cash on Hand:
$3,970,000,000
Cash To Deposit Ratio:
99.55% of Deposits not covered
https://www.td.com/investor-relations/ir-homepage/financial-reports/quarterly-results/qr-2017.jsp
BMO Deposits:
$352,381,000,000
BMO Cash On Hand:
$32,559,000,000
Cash To Deposit Ratio:
90.76% of Deposits not covered
https://www.bmo.com/home/about/banking/investor-relations/annual-reports-proxy-circulars
CIBC Deposits:
$163,833,000,000
CIBC Cash On Hand:
$3,440,000,000
Cash To Deposit Ratio:
97.90% of Deposits not covered
https://www.cibc.com/content/dam/about_cibc/investor_relations/pdfs/quarterly_results/2017/ar-17-en.pdf
National Bank Deposits:
$245,827,000,000
National Bank Cash On Hand:
$8,808,000,000
Cash To Deposit Ratio:
96.42% of Deposits not covered
https://www.nbc.ca/content/dam/bnc/en/about-us/investors/investor-relations/annual-reports-proxy-circulars-aif/nbc-annual-report-2017.pdf
Caisse Populaire Deposits:
$1,341,117,838
Caisse Populaire Cash On Hand:
$65,842,721
Cash To Deposit Ratio:
95.09% of Deposits not covered
http://www.caisse.biz/wp-content/uploads/2018/01/Caisse-Financial-Group-Annual-Report-2016-17.pdf
Bank of Nova Scotia Deposits:
$585,020,000,000
Bank of Nova Scotia Cash on Hand:
$7,830,000,000
Cash To Deposit Ratio:
98.66% of Deposits not covered
https://www.marketwatch.com/investing/stock/bns/financials/balance-sheet
Desjardins Group Deposits:
$160,546,000,000
Desjardins Group Cash On Hand:
$1,876,000,000
Cash To Deposit Ratio:
98.83% of Deposits not covered
https://www.desjardins.com/ressources/pdf/d50-rapport-gestion-mcd-2016-t4-e.pdf?resVer=1488556863000
HSBC Bank of Canada Deposits:
$56,537,000,000
HSBC Bank of Canada Cash On Hand:
$49,000,000
Cash To Deposit Ratio:
99.91% of Deposits not covered
https://www.newswire.ca/news-releases/hsbc-bank-canada-reports-third-quarter-2017-financial-results-654033853.html
Canadian Western Bank Deposits:
$21,902,982,000
Canadian Western Bank Cash on Hand:
$17,491,000
Cash To Deposit Ratio:
99.92% of Deposits not covered
http://www.cwbankgroup.com/~/media/cwb%20group/documents/investor%20relations/annual%20reports/cwb_2017_ar_fs_fin.pdf
Laurentian Bank of Canada Deposits:
$28,930,360,000
Laurentian Bank of Canada Cash On Hand:
$327,362,000
Cash To Deposit Ratio:
98.86% of Deposits not covered
https://www.laurentianbank.ca/pdf/367_002_RAP_2017_EN_Vf3.pdf
Fractional reserve means they have about 5 - 10% on hand to handle withdraws. The derivatives exposure if I remember correctly is between 3 to 5 times the net worth of the banks. Derivatives will bring these banks down so quickly when the interest rate goes up and the chain of default starts.
I was looking at Canadians banks on balance sheet derivatives and they are big enough to topple them alone. The worst part is of course off balance sheet Derivatives in SPE and SPV's. Also Canada is using a zero reserve banking. Meaning the banks set their own reserve ratios as you can see!
Thank you I didn't know the reserve can be down to zero. Do you think credit union is less risky without the Derivatives time bomb?
I haven't looked too much, but I have seen on the balance sheet of one of Winnipeg's biggest CU MBS from their highest risk mortgages. $159M I think
I am working on doing CU and banks in other countries that will come in the coming weeks. Took about 4 hours putting together the above info.
I know how the derivatives work as far as stocks and options but how are the banks using them? Are the Canadian banks better or worse than the US ones?
Credit Default Swap is like insurance bet on some bond, mortgage backed security or credit instrument default. Investment Banks would act like a bookie taking bets and if nobody defaults that is great extra income to pay the big bonus to executives. The potential payout is usually many times the banks assets so if a lot of these bet go sour banks will go bankrupt, at that point all the money the banks spend lobbying will pay off as it is bailout/bailin time.
It created the Bailout of AIG in 2008
That makes sense. The banks buy cheap insurance and the investment banks make easy profit until things go against them.
Canadian banks issues MBS's! BMO issued AAA rated MBS's last year.
Well if I understand correctly the bank bail-in is supposed to convert all bank issued bonds to "then worthless" shares. Turning dead banks to zombie... IIRC bank bonds are owned by the likes of ETF, mutual funds, pension fund, insurance company asset so it is just a round about way to ding all savers.
Globe and mail article on bank bail-in
I think crypto is not a bubble, many more will be fleeing the sinking fiat/banks.
https://www.fin.gc.ca/n17/data/17-057_1-eng.asp
Oh man those cash to deposit ratios look precarious
Welcome to the Fractional Reserve Banking system. Actually in Canada it's Zero reserve banking! https://www.bankofcanada.ca/1997/04/working-paper-1997-8/
So crazy, it's all there to read but nobody cares. At least there's an appendix that outlines the process by which reserve requirements were phased out in Canada, the idiocy is well documented ;)
This is sad, solid information man thanks!
I'm working on exposing credit unions and several big global banks as well. People need to know this!
Disappointing since banks are foundation on which a country's financial structure rests.
I’ve always wondered what would happen to Canadian banks if Canadian real estate were to collapse.
Had a mortgage broker friend of mine mention how a local credit union customer couldn't withdraw $1M in cash from a local bank!
How long ago was this?
What city was this in?
I’m in Alberta. I’ve heard a few rumours on ATB Financial. I can imagine ATB May have over leveraged themselves during the Alberta oil boom.
Last year in Manitoba. BTW I did one on Canadian Credit Unions! https://steemit.com/money/@theeconomictruth/canada-s-credit-unions-are-bankrupt-what-you-need-to-know-about-your-credit-union
Great! I’m about to check it out!
Don't wonder, instead wait. :)
Doesn’t bode well for my fellow Canadians.
O my lord, wth our banks are 90-95% empty? Nobody is talking about this, they’re more concerned with Justin makin a damn joke. This isn’t a joke, our citizens are basically bankrupt and they don’t even know it. We need to solve this. What are these politicians all blowing it on crack or something now? Like I’m absolutely terrified right now because of this. As a Canadian, I’m furious to the bones. Where are our manufacturers where are our resources going how is one of the biggest countries in the world, full of resources completely insolvent? It doesn’t make any sense. We need to force government to adhere to a completely transparent platform. We need our systems to be verified on a Blockchain so we can’t be bought and debted out of house and home.
It's probably just a matter of time before the Central Banking system collapses. Banks are not worried because they know Trudeau will bail them out with Tax Pay $$. The Central Banking Cartel is really a very fradgile ponzi scheme and will collapse.
We will see Bank Recapitalizations aka. Bail Ins :)
I suspect that would apply to all banks everywhere in the world.
Will be doing more reports on this. Just did one on Canadian Credit Unions! https://steemit.com/money/@theeconomictruth/canada-s-credit-unions-are-bankrupt-what-you-need-to-know-about-your-credit-union
Thanks for the stats. At least on paper BMO is less insolvent.
They are close to a fractional reserve banking. The rest is using a zero reserve policy that BOC implemented for Canadian banks.