Which Canadian banks are too big to fail?
In March 2013, the Office of the Superintendent of Financial Institutions announced that Canada's six largest banks, Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, National Bank of Canada, Royal Bank of Canada and Toronto-Dominion Bank, were too big to fail.
Every one of the big banks in Canada is essentially too big to fail, and there are very high odds the federal government would step in and rescue any of them, if needed, to prevent a failure, says Alfred Lehar, an associate professor with the University of Calgary's Haskayne School of Business.
- Bank of America Corp.
- The Bank of New York Mellon Corp.
- Citigroup Inc.
- The Goldman Sachs Group Inc.
- JPMorgan Chase & Co.
- Morgan Stanley.
- State Street Corp.
- Wells Fargo & Co.
Before March 2023, only three banks had failed since the coronavirus pandemic started. And all three (The First State Bank, First City Bank of Florida and Almena State Bank) experienced previous financial problems, according to the FDIC. (There was one bank failure in 2020 before the pandemic started.)
With $557 billion in assets, PNC Bank is the sixth largest in the United States, although even the fourth largest, Citibank, more than triples that amount. While significant, PNC's scale doesn't place it in the same "too big to fail" category as the giants on the G-SIBs list.
Toronto-Dominion Bank (TSX:TD) is the “safest” Canadian bank going by capitalization. Today, it has a 16.2% common equity tier-one (CET1) ratio. The CET1 ratio is cash plus equity divided by all risk-weighted assets.
All of these efforts seem to be working, as there have been zero bank failures in Canada since 2001 compared to 563 in the U.S.
In March 2013, the Office of the Superintendent of Financial Institutions announced that Canada's six largest banks, Bank of Montreal, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, National Bank of Canada, Royal Bank of Canada and Toronto-Dominion Bank, were too big to fail.
As of 2023, eight American banks qualify as too big to fail in the narrowest sense — that is, they're under the jurisdiction of the Large Institution Supervision Coordinating Committee. Those banks are: JPMorgan Chase. Citigroup.
| Bank Name | City | Acquiring Institution |
|---|---|---|
| Heartland Tri-State Bank | Elkhart | Dream First Bank, N.A. |
| First Republic Bank | San Francisco | JPMorgan Chase Bank, N.A. |
| Signature Bank | New York | Flagstar Bank, N.A. |
| Silicon Valley Bank | Santa Clara | First–Citizens Bank & Trust Company |
Which is the safest bank?
| Bank | Forbes Advisor Rating | Learn More |
|---|---|---|
| Chase Bank | 5.0 | Learn More Read Our Full Review |
| Bank of America | 4.2 | |
| Wells Fargo Bank | 4.0 | Learn More Read Our Full Review |
| Citi® | 4.0 |
2024 in Brief
There are no bank failures in 2024. See detailed descriptions below. For more bank failure information on a specific year, select a date from the drop down menu to the right or select a month within the graph.
What is the No. 1 bank in America? J.P. Morgan Chase is the number one bank in America in terms of total assets held, according to the Federal Reserve.
Generally, money kept in a bank account is safe—even during a recession. However, depending on factors such as your balance amount and the type of account, your money might not be completely protected. For instance, Silicon Valley Bank likely had billions of dollars in uninsured deposits at the time of its collapse.
Wells Fargo, along with thousands of other financial institutions, is FDIC-insured. FDIC insurance limits cap at $250,000. The FDIC insures certificates of deposit and money market accounts, along with traditional checking and savings accounts.
Importantly, PNC and PNC Bank are not in financial distress or in danger of failing.
The largest Canadian banks are known as the "Big Five," with the Royal Bank of Canada (RBC) being the largest. The top three are rounded out by Toronto-Dominion (TD) and the Bank of Nova Scotia (Scotiabank) in second and third, respectively.
The banking industry in Canada is dominated by the five largest banks in the country: Toronto-Dominion Bank (TD Bank), Royal Bank of Canada (RBC), Bank of Nova Scotia (Scotiabank), Bank of Montreal (BMO), and Canadian Imperial Bank of Commerce (CIBC).
The FDIC guarantees the safety of a depositor's accounts in U.S. member banks up to $250,000 USD per depositor for each deposit ownership category in each insured bank. In comparison, the CDIC insures Canadians' deposits held at Canadian banks up to $100,000 CAN.
Deposit insurance protects your savings if your financial institution fails. You don't have to apply or pay for deposit insurance. The Canada Deposit Insurance Corporation (CDIC) automatically insures your eligible deposits. This applies to deposits held at CDIC member institutions in Canada.
How healthy are Canadian banks?
The country's financial stability, and the high profitability of its banks at a time when those in the U.S. are in turmoil, comes from strong regulations. If inflation and rising interest rates weren't enough to cause anxiety about the global economy, bank failures, or near collapses, have been added to the mix.
To put this in perspective, no Canadian bank failed during the Great Depression, World War II, or the Great Recession. And in those rare times they do fail? You're protected. The Canada Deposit Insurance Corporation, or CDIC, guarantees you'll get your money back if a bank fails.
The 2008 crisis happened because of uncontrolled credit risk. The regulators imposed several reforms that required banks to maintain a certain amount of capital for their risky assets. TD Bank exceeds the minimum capital requirement by a good margin, hinting it is well capitalized against risky assets.
Reuters reported early in April that TD Bank had become the most shorted bank in the world as hedge funds bet billions of dollars that the institution's share value would fall.
In terms of customer experience, RBC is hands down the best. Next comes TD and CIBC. Scotia is one of the worst. I have both personal and business banking with Scotia, they simply are the worst.
