Stricter deposit rules could impact online banks
"Canada’s banking regulator is proposing tougher rules governing deposits sourced online or from third-party brokers, in a move that would make banks more stable in times of stress but could also put some smaller lenders at a competitive disadvantage....
The draft changes put forward by the Office of the Superintendent of Financial Institutions (OSFI) have not yet been made public. If approved, banks would be required to hold 20 per cent to 40 per cent of deposits gathered from unaffiliated brokers or internet-based accounts as a buffer against sudden withdrawals that could put a lender at risk. ...
Although all banks would be affected, the impact could be felt most acutely by institutions such as Home Capital, Equitable Bank and Manulife Bank of Canada, depending on each institution’s funding strategies. Low-cost online banks Tangerine and Simplii Financial, which are owned by Bank of Nova Scotia and Canadian Imperial Bank of Commerce respectively, may also be more exposed."
https://www.theglobeandmail.com/busines ... for-banks/
What they are talking about is not something that would affect customers directly, but rather a measure that would impact the online bank's financial returns and probably force them to reduce interest payouts and increase loan rates. They would be required to hold a larger percentage of their deposit assets rather than investing or loaning the money out. This puts them at a competitive disadvantage compared to traditional banks.
The draft changes put forward by the Office of the Superintendent of Financial Institutions (OSFI) have not yet been made public. If approved, banks would be required to hold 20 per cent to 40 per cent of deposits gathered from unaffiliated brokers or internet-based accounts as a buffer against sudden withdrawals that could put a lender at risk. ...
Although all banks would be affected, the impact could be felt most acutely by institutions such as Home Capital, Equitable Bank and Manulife Bank of Canada, depending on each institution’s funding strategies. Low-cost online banks Tangerine and Simplii Financial, which are owned by Bank of Nova Scotia and Canadian Imperial Bank of Commerce respectively, may also be more exposed."
https://www.theglobeandmail.com/busines ... for-banks/
What they are talking about is not something that would affect customers directly, but rather a measure that would impact the online bank's financial returns and probably force them to reduce interest payouts and increase loan rates. They would be required to hold a larger percentage of their deposit assets rather than investing or loaning the money out. This puts them at a competitive disadvantage compared to traditional banks.