资本市场和金融机构(5).ppt

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1、THE FINANCIAL SERVICES SECTOR IN CANADA:Deposit Taking Institutions(DTI)(Based on Chapter 2of the Textbook by Saunders,Cornett and McGraw)Outline1.Importance of DTI.2.Depositary FIs:The Banks3.Balance Sheet4.Credit Unions5.Bank Regulators and regulations6.Conclusions 1 1.Importance of DTInMajor sour

2、ce of investment by individualsnThe claims on Depository Institutions(demand deposits)result on the majority of money supplynMain channel for societys transmission of risks and fundsnCritical to the overall payments systemnWith FIs Information asymmetry(between lenders&borrowers)Flow of fundsFIs Sav

3、ings Investment Economic growth Societys Well-being22.Depository Financial Institutions:The BanksPlay a pivotal role in the delivery of financial services and are the driving force behind Canadas financial systemMain Function Channel funds from savers(deposit-taking)to borrowers(loans).nCore service

4、s:deposits and loans,nOther services:Money orders,foreign exchange,letters of credit,mortgages,financial planning,RRSPs,insurance products such as creditor life insurance and investment products.3Some reasons why the Cdn banking system has not been negatively affected as in the U.S.by the subprime c

5、risis.Canadian Bankers Association April 2009nBanks in Canada are more regulated than in the U.S.nCanadas banks are among the best capitalized in the world.nCanadians have not had to bail out financial institutions,inject capital into institutions,or set up public entities to buy toxic assets unlike

6、 the U.S.nThe vast majority of mortgage loans are prime.nMortgages in arrears remain very low(only 0.38%)nMortgages with less than 20%down must be insured unlike in the US.nThe World Economic Forum ranks Canadas banking system as the most sound in the world.4nThe Banks 5Largest Depository Institutio

7、ns Total Assets($Billions)Royal Bank of Canada$447.7Toronto-Dominion Bank 311.0Bank of Montreal 295.2Bank of Nova Scotia 279.9Canadian Imperial Bank of Commerce 388.0 Desjardins Group Inc.(credit union)103.6National Bank of Canada 275.2HSBC Bank of Canada 43.3Laurentian Bank of Canada 16.6Vancouver

8、City Savings(credit union)10.567nBanks in Canada Source:CBA 2005Federally regulated and governed by the Bank ActCategories of Banks nSchedule I:Domestic Banks(20)Shares must be widely held which serves to restrict any one shareholder or group from having control over a bank($150,000)nExamples:J.P.Mo

9、rgan Chase Bank,ABN Amro Bank N.V.Bayerische LandesbankForeign lending branches(5)8International Activity of the Big SixBankPrimary Focus Intl Assets%of Intl(Cdn (C$billions)Assets in total assets)BofMU.S.,Mexico 11243%CIBCU.S.10837%B of NSSouth America,U.S.13947%TD Canada Trust U.S.9932%Royal BankE

10、urope,Asia 18948%National BankNo significantinternational presence 1520%(Source:OSFI,Money,Banking and Financial Markets,Miskin,Serletis,2005,2nd Cdn edition)93.Balance Sheet(See Table 1-3,Aug 1999)Total Assets(uses of funds)=Total liabilities+capital(both comprise the sources of bank funds)Liabilit

11、ies:Main sources of funds (Updated figures Oct 2004)a)deposits(67%of bank liabilities)66%(Oct 2004)b)borrowing(27%)29%c)equity(5%)5%Assets:Main uses of funds a)Loans(60%)56%b)Securities(21%)25%c)Cash resources(7.3%)5%Exposure:Loan default(Default risk)&Maturity mismatch(Interest rate risk)10Uses of

12、FundsnA bank uses the funds that it has acquired by issuing liabilities(short term deposits)to purchase income-earnings assets(long term assets-less liquid and more risky).Process called Asset Transformation This involves Liquidity Risk High%of Loan(long term)involves high Default RisknTrend Fewer c

13、orporate loans due to disintermediation(Removal of a FIs in transaction.)Private placements through Institutional Investors(Large non-bank FIs)11nSources of FundsnDeposits and BorrowingnDemand deposits.Checking accounts(payable on demand)nNotice Deposits:Interest bearing deposits that can be withdra

14、wn with prior notice nFixed Term deposits:Interest bearing deposits.Includes Interbank market deposits(41%)nNon-DepositsnAdvances from BofC(overdrafts loans)nOvernight loansnCommercial papernDebentures12 Bank Capital(net worth)Funds are raised by selling new stock or from retained earnings.Off-balan

15、ce Sheet items nNo recorded on the balance sheetnContingent items:Occurrence,timing,and/or amount is unknown a)Credit Substitutes:E.g.,Loan guarantees,committed lines of credit,lending of securities held in trust by the FI.b)Derivatives products(forwards,futures,options,)nThey become on-balance shee

16、t items when a contingent event occurs.13OFF-Balance Sheet itemsnAdvantages:nAdditional income;No deposit insurance premium paid;Less capital adequacy requirements by regulators.nHedge FIs credit,interest rate and FX risksnRisks:n Off-BS activities are for tradingnGain or loss is based on the possib

17、le change in the market value over the life of the contract(usually less than 3%of the notional value of the contract.n Unexpected defaults of guaranteed loans,loan commitments 14Other sources of income:Trust servicesnInvestment advisor:Asset Allocationn i.e.,How to balance your investment portfolio

18、 nEstate Planningninheritance nPlanning for Your Retirement Yearsn Why,How and When nAct as transfer agents for government or corporate securitiesn E.g.,bankruptciesCorresponding BankingnServices provided to other banksnE.g.,cheque clearing and collection,foreign exchange trading,participation in de

19、bt and security issuances.154.Credit unions and caisses populaires Cooperative banks are small lending institutions organized around a particular group of individuals with a common bond(union members or employees of a particular firm).nThey are non-profit-seeking FIs.nThey mostly provincially regula

20、ted.n Members determine their lending and investment policies(60%in Quebec)nLiabilities:nMostly Deposits by members (86%)nAssets:nMortgages(48%)and personal loans(13%).165.Bank RegulatorsnBank of Canada nResponsible for the integrity of the Cdn financial systemnOffice of the Superintendent of Financ

21、ial Institutions(OSFI)nPrudential Regulator to ensure safety of Fin SystemnRegulates and supervises federally regulated FIs:Auditing,accounting,capital adequacy,corporate governance.nCanada Deposit Insurance Corporation(CDIC)nEnsures retail deposits up to$100,000 of deposit taking member FIs.nFinanc

22、ial Consumer Agency of Canada(FCAC)nMarket Conduct Regulator17nBank RegulationsnBanks are heavily regulated nRestrictions on:products,activities,ownership,investments,and capitalizationnRegular filing of financial reports.nPeriodical update of bank laws nFlexibility to adapt to changes and compete i

23、nternationallynRegulatory coordination of FIs among countriesnThe Bank for International Settlements(BIS)is the central bank for central banks,facilitating inter-central bank payments and serving as a forum for bank regulatory harmonization.18Experts:Need of a National Service Regulator in CanadanTo

24、 reduce overlap and duplication of government regulatory functionsnRegulatory expenditures per$1,000 of finance and insurance is$10.83Compared to Australia,$6.85,and UK of$4.26.nTo cover all areas of financial regulation under one jurisdictionnCountries that have moved or are expected to move to a r

25、egulatory national system of FIs:nAustralia,UK,Sweden,Norway,Germany,Denmark,Ireland,Japan197.ConclusionsnCanadian FIs,mainly the 6 largest banks in Canada,are the driving force behind Canadas financial system.nCanada is world leader in the use of both debit cards and ABMs,and debit card terminals and internet banking in a per capita basis.nMain Function of Banks:Channel funds from savers(deposit-taking)to borrowers(loans).nBanks are heavily regulated.nBank reforms.To encourage a proactive role in the provision of worldwide financial services by Cdn FIs.20