Today, Canada and her banks have a large impact on the global economy. Of course, to arrive at a system that is so sophisticated and well planned was not easy. It took centuries of endeavoring, refining, and experimenting to arrive at the modern Canadian banking institutions. The current banking system of Canada has given way to “The Big Five” banks in the country. These include the Toronto-Dominion Bank, Royal Bank of Canada, Bank of Nova Scotia, Canadian Imperial Bank of Commerce, and Bank of Montreal. In this article, the origins of these banks will be explored, allowing you to catch a glimpse of how it all started.
Banking in Fledgling Canada
When the French were still in control of the country, bartering was the main form of trade. This was largely due to the fact that there was no local currency within the region. The main currency that came into early Canada was French currency. This, however, was sent right back to France for the purposes of importation. Currency was first really introduced to the nation when the British defeated the French, taking over the country. Spanish, French, Mexican, German, and Portuguese coins were used to pay the soldiers. This soon led to currency being more widespread in the area.
Early Banking Attempts
There were those who attempted to establish a banking system in early Canada. In 1792, there were nine Montreal merchants who decided to form the Canada Banking Company. Unfortunately, the company failed to get permission to issue bank notes, resulting in its untimely failure. There were other endeavours that followed the Canada Banking Company in 1807 and 1808. These too, however, failed to gain any traction and soon closed their doors.
The First Bank
By all accounts, the first bank in Canada is recognized as being the Bank of Montreal. Although it began operations in 1817, it was only approved as an institution in 1822. At this point, nonetheless, there were other banks that were also being recognized. These was the Bank of Upper Canada and the Bank of New Brunswick. There was also another institution, the Bank of the People that was launched by Francis Hincks, who was soon to be Prime Minister of the Province of Canada.
The Formation of the Other Four Major Banks
The Bank of Nova Scotia is the second oldest bank in the group. It was created in 1832, becoming the first chartered bank in Nova Scotia. This institution was created as an alternate to the then-current Halifax Banking Company. The original members were James Foreman, Benjamin Carlile, Alexander Paul, James Maxwell, and the President, William Lawson.
The Toronto-Dominion Bank, commonly referred to as TD, was brought to life in 1955, following a merger between two other institutions. This merger consisted of the Bank of Toronto, founded in 1855, and the Dominion Bank, started in 1869. This led to the TD having a long lineage, despite its later commencement.
The Canadian Imperial Bank of Commerce is also a product of a merger. In fact, it holds the title for one of the largest mergers between two banks in Canada. The Canadian Bank of Commerce, started in 1867, and the Imperial Bank of Canada, established in 1875, were the original institutions.
The Royal Bank of Canada began its operations under a very different name in 1864. It was the Merchants Bank of Halifax. In 1869, it became a public company. Between 1900 and 1930, the bank experienced incredible growth. This prompted them to change their name to the Royal Bank of Canada. Over the years, RBC has merged with the Union Bank of Halifax, the Traders Bank in Canada, the Quebec Bank, the Northern Crown Bank, and the Union Bank of Canada.
The Current Performance of the Big Five
All of the Big Five banks continue to be based in Toronto. In terms of capitalization, deposits, and assets, these financial institutions have claimed their spots above the rest. Collectively, they consist of about 85 percent of the overall banking industry in Canada. One of the reasons that these banks continue to top the list is that they have been considerably resilient, even in the face of the recession.
Currently, the Royal Bank of Canada is the largest bank among them, boasting about $655 billion in assets. The Toronto-Dominion bank is a close runner up with assets of almost $560 billion. The Bank of Nova Scotia claims the next spot with $500 billion in assets. Bank of Montreal has almost $390 billion in assets. In fifth place is the CIBC, which has about $336 billion in assets.
While these banks still remain five of the most important banks both worldwide and in Canada, there have been a few shakeups. For instance, over the years, RBC, TD, and the Bank of Nova Scotia have been performing considerably better, allowing them to sequester the top three positions by a landslide. Although still incredibly relevant, the Bank of Montreal and CIBC have been lagging for a while now.
This is the history of the major banking institutions in Canada. Most of these banks have been around for a long time and have managed to maintain their powerful positioning despite considerable upheavals.