<p>I’ve been reading about bank consolidation. According to the Fortune article below, the number of small US banks has declined by 80% during the past fifteen years, while the proportion of deposits held by the five largest banks has tripled. I realize banks are only one part of a much larger system. Does bank consolidation in this country mean anything at all?</p>
<p>Considering that in what is likely the most stable banking system in the world, Canada’s, there are five major banks, I doubt that a reduction in the number of banks in the U.S. is necessarily a bad thing.</p>
Yes, it means that banks become more of a systematic risks to the entire economy. This is because they will be more interconnected. </p>
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<p>Canadians pay one of the highest bank fees in the entire developed world. The banks make so much money from their customers it is impossible for them to lose money. </p>
<p>Canadian mutual fund fees are also the highest in the developed world.</p>
<p>I can’t seem to find any comparisons online. Do you happen to know of one? It hasn’t been our experience, in living in both countries, to see much of a difference in bank fees. I can assure you that fees are not the main reason that Canadian banks are so profitable. If the fees are higher, I’ll gladly pay a few extra dollars per month if it means avoiding the type of financial disaster that has occurred in the U.S. in the past couple of years.</p>
<p>alwaysamom, I read it on a canadian blog milliondollarjourney, I will search for the exact post and post it some time. Some of the banks even charge you for writing a check, or transferring money from one account to the other. </p>
<p>The mortgage securitize market is not strong in Canada, which helped them avoid the mortage mess. Also, from my readings, Canadians are expected to put some down payment for their house, unlike in the US where it is possible to get a mortgage without putting any money down.</p>
<p>We don’t even need five health insurance companies, we have universal care here. Our banks are great; probably the safest banking system in the world.</p>
<p>tega, don’t believe everything you read on blogs, especially about the banking system. The mortgage mess was avoided by the Canadian banks, largely, because they are better run and have better corporate governance than many U.S. banks.</p>
<p>Canada is a small country that happens to occupy a large area so they shouldn’t have a large number of bigger banks. </p>
<p>Consolidation is largely meaningless to a user except when branches are closed. That really can be a pain for older people, people who don’t drive, poorer people, etc.</p>
<p>The five large banks are it. They service the entire country, and a few have U.S. operations, as well. Compared to the U.S. where, not that long ago, there were approximately 9,000 different banks. Canada’s population is small compared to the U.S. but certainly not to the extent that it would be 5 v. 9000.</p>
<p>Come on, it means a heck of a lot for mortgage rates, or borrowing rates in general, especially true in a country that has its own currency and fairly low levels of foreign investment.</p>
<p>As for competition, there will always be local banking - from small banks and savings & loans to credit unions. Consolidation in a market can affect small business a lot - because the new, larger bank may be less interested, may have different credit standards, etc. An individual can get a mortgage originated from any number of sources, including local mortgage companies and over the internet.</p>
<p>lergmom, the only ones that have any extensive system of retail branches are the big five: Royal, TD, Scotiabank, CIBC, and Bank of Montreal. They have tens of thousands of employees and branches everywhere. Royal and TD are in the top 10 largest banks in North America, by some measure, I believe that two of the others are also included. TD now has as many U.S. branches as it does in Canada. Most of the others on that list are not retail operations. I’ve never even heard of most on that list and I’ve lived in Canada for most of the past 30+ years. Others on the list are operations that are actually run by one of the large banks, e.g., President’s Choice (CIBC) and First Nations(TD). It’s true that there are a couple like National Bank, which have grown a bit in recent years but are very regional. For all intents and purposes, Canada has five banks. In any case, it has nothing, as I said before, to do with the size of the country.</p>
Our banks are great; probably the safest banking system in the world.</p>