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Big Bank run.
June 25, 2010
9:58 am
mike
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I post the following to encourage you to think about your money over the $100k CDIC limit and not put all your eggs in one basket...

Being a capital preservationist in these uncertain times I didn't feel having money over the CDIC limit in HSBC was worth the risk (0.8%) so we did a big bank run and took out everything over the CDIC limit and deposited it at ATB Financial (100% guaranteed deposit by the Alberta Gov't Tresury) at a 1.0% rate.

It is amazing how much time and cost it is to move a large amount of money from one bank to another. HSBC actually charges a commission % (.025%)* if you do a wire on your cash, plus the wire charge and 5 days to get the money together. HSBC really, really, didn't want us to withdrawl that much from them as they are leveraged quite high vs deposits. And HSBC paid for the large transfer fee (who said you can't get something for free from a bank?) to encourage us to come back to them again.

Call us crazy, but I'll tell you, taking our money out of HSBC that was over CDIC allows us to not worry and sleep better at night. Not that HSBC will go down Leaman or AIG style.

Bank run complete.

*I wasn't going to pay HSBC commission to take my cash out, I would have requested my withdrawl to be paid in small notes and hired a Brinks truck to make a point.

Have a great day

June 25, 2010
11:12 pm
msl25
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congratulations!!!

i would also make a mini bank run of myself but since i only have
$100 and not $1,000,000 it would be very futile. thanks for sharing your experience though.

June 26, 2010
12:46 am
Doug
British Columbia, Canada
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No offense, mike, but you could've simply asked for a draft in lieu of cash at no charge. HSBC happily obliges those requests. We'll even provide you with direct line contact information for the receiving financial institution to verify the draft (so they don't place a bank hold on the clearing item). ๐Ÿ™‚

Cheers,
Doug

June 26, 2010
4:04 am
guest
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Guests

Good call Mike. I made a bank run from there over a year ago. They really need to up their rates in order to be competitive again. You really know they are falling behind when even ING can beat them. I would like to see them come back with a major promotion like they had the last time where their rates were like 1.5% above the best rate out there for a 6 month period and it wasn't just on new deposits either (ie. a teaser rate). All customers benefitted.

June 26, 2010
4:04 am
guest
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Even PC financial beats them.

June 26, 2010
6:34 pm
Simon
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Yeah, HSBC really kept itself out of the game this year. Especially with their TFSA.
I wonder what they could possibly be waiting for.

June 26, 2010
9:31 pm
Doug
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Simon,

HSBC Bank Canada has really refocused its customer and deposit acquisition strategy, targeting the high affluent segment of the market with its Premier package and the emerging affluent segment with its Advance proposition. The minimum entry point to those is the $25,000 in assets (deposits, investments, registered plans, etc.).

HSBC will still welcome retail deposit clients but they aren't targeting their messaging in that area and aren't trying to attract ordinary day-to-day banking accounts with great interest rates or low service charges. Essentially, they're aligning themselves with the HSBC Group change in strategy globally and admitting they don't have the scale to compete with the Big Six banks plus all of the credit unions so why bother trying.

On the lending side, they've joined RBC and BMO in ending relationships with mortgage brokers and even went a step further by terminating its own in-house mortgage development specialists, forcing people who want an HSBC mortgage to come into a branch or call the Direct Bank branch and deal with a telephone-based relationship manager.

It's an interesting strategy and I'll reserve comment on its merits but it will be interesting to see how it plays out.

In terms of Commercial Banking though, HSBC is very much in the game focused on small- and medium-sized businesses with its hugely attractive and highly competitive Business Direct and BusinessVantage products.

Cheers,
Doug

June 27, 2010
6:48 am
Simon
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Doug said:
Essentially, they're aligning themselves with the HSBC Group change in strategy globally and admitting they don't have the scale to compete with the Big Six banks plus all of the credit unions so why bother trying.


I admit I don't know enough about this to argue. But two conflicting examples came to mind when I read this:
1) NBC, which is much more of a personal than a commercial bank, offers uncompetitive rates (below HSBC's for that matter);
2) CWB, which is much smaller than HSBC (let alone the Big 6), still keeps its rates on par with the market.

June 27, 2010
8:51 pm
Doug
British Columbia, Canada
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I don't have a lot of knowledge on National Bank of Canada but with regard to Canadian Western Bank - and I love that bank, by the way, with their friendly, locally-based staff answering branch phone lines - perhaps their GIC rates are competitive simply because they're targetting the deposit brokers in a bid to secure their capital base? It's just a different strategy than the one HSBC is trying. HSBC tried this strategy with its own Deposit Broker Centre, mobile mortgage sales force and relationships with third-party mortgage brokers, all of which have now been terminated.

I don't know which one is better but I can definitely say that you do need a large branch network to have the scale of the Big Five banks. That requires major capital investment, either organically or through acquisition (the latter of which would require both OSFI and Minister of Finance approval).

Cheers,
Doug

June 28, 2010
10:53 am
mike
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Thanks for the replies and the great comments.

I should add that it was 5 days for a wire transfer to go through, but failed to mention we had already waited 7 days before that for a bank draft option (as Doug pointed out to try). HSBC did not want to issue a bank draft for that amount and preferred the security of a wire. (after waiting the 5 days for HSBC to do it, it took another 2 days to show up at ATB). So the whole process took a little over 2 weeks.

And there is a maximum HSBC direct can "pump up" an online do-it-yourself ETF bank-to-bank transfer so that easily failed.

** I share this information with you all so you know how difficult, time consuming and expensive it can be to take your money out of a bank. If there was a real banking crisis on our hands, you may not have time to get your money out in a day or a few hours. Just something to think about...

Have a great day

June 28, 2010
1:41 pm
guest
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rbc and bmo (and hsbc) have "ended their relationships with mortgage brokers"??? wow, i wasn't aware of that. that's a fundamental change in the residential mortgage landscape, particularly if the other big banks follow. so doug, as our resident banking insider, what do so see as being the motivation for this? is this a classic shift from high-volume high-risk stuff (i.e. business brought in by brokers with a cut going to the broker, little or no vetting of the borrower's credentials beyond the basics) to low-volume lower-risk (i.e. the banks pick and choose from the lowest-risk borrowers, and in so doing decrease gross profit, but also decrease loan-loss risk and therefore increase margin)? do you think the other big banks will follow, or will they see their best competitive position as maintaining the status-quo with the brokers???

June 29, 2010
12:11 am
Doug
British Columbia, Canada
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Hrm, that's weird. What branch did you use, mike?

Although HSBC branches are prohibited from performing transactions from HSBC Advance Savings accounts, branch staff have the ability to close HSBC Advance Savings accounts and then transfer the funds to an internal bank suspense G/L account in order to process the final bank draft from the account. We may even waive the service charge on the draft if you ask nicely. We would also proceed to close your Internet banking profile, HSBC debit card and related accounts. All of this is provided free of charge and available at any HSBC branch upon presentation of two (2) pieces of valid, non-expired ID. ๐Ÿ™‚

Cheers,
Doug

June 29, 2010
12:22 am
Doug
British Columbia, Canada
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hi guest,

I read it in a few newspaper articles recently, namely Canadian Press wire stories I would imagine. Apparently BMO ended their mortgage broker relationships a year or two ago and have seen mortgage market share fall from 9.7% to 9.2% but it's held steady at 9.2% so a 0.5% drop in share is marginal. I think the primary motivation would be, like HSBC, to get a higher share of the "customer's wallet" and have their mortgage, RRSPs, chequing account, credit card and perhaps a savings account instead of just a mortgage or a mortgage with a low-activity chequing account and less related to certain other reasons you mentioned.

RBC ended theirs either shortly before BMO or after, can't remember which. Both BMO and RBC still have in-house "mobile mortgage specialists" who are employed by the banks on a fully-commissioned or partial-commission and partial-salary basis but they're only permitted to source mortgages for their respective employers (which make sense). I could potentially see Scotiabank eventually follow suit but I really think TD Canada Trust and CIBC will continue to use mortgage brokers because they have such large mortgage market shares and are heavily invested in mortgages from third-parties (like mortgage brokers). CIBC even owns FirstLine Mortgages - which deals solely with mortgage brokers - and another company whose name escapes me.

Hope that helps,
Doug

June 30, 2010
7:47 am
mike
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Doug - Vancouver, Main branch, HSBC.

Update - With the market votility there appears to be a flight for safety going on. Making sure you are protected (ie. Under CDIC limits) is getting more important. You are protected for UPTO $100k in any bank account that has CDIC insurance. Anything over $100k, well... who knows.

Diversify your risk, diversify your assets.

Have a great day

June 30, 2010
2:25 pm
Doug
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mike, perhaps by going to Vancouver Main Branch, you got a strict, no deviation, by-the-book staff member? I can assure you had you gone to another branch you would've been able to get a draft the same day you requested it provided you showed two pieces of valid ID.

If any of the Big Five banks or HSBC, the world's largest financial services organization, by then the world's gone to hell and our money has probably depreciated so badly we're in a state not unlike Zimbabwe but on a global scale.

The only ones I worry about staying within the $100,000 per depositor CDIC limit (and joint accounts, deposits marked in trust for someone else and RRSPs are outside your sole depositor CDIC limits) are small banks and trust companies. Credit unions' deposits are guaranteed by provincially-owned Crown corporations but again that guarantee is only as good as the province itself making the guarantee and there's no obligation the federal government would bail the province out.

Cheers,
Doug

July 2, 2010
4:50 am
msl25
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BIG BANK RUN... he he he

or should i say, "BIG ABM BANK RUN?"
and they just did that!!!

happy canada day! so i went to my scotiabank branch abm
here at richmond, bc. first i checked my balance.
and yes, correct, it is the amount i have in my mind.
then i just have to do some withdrawal... and guess what?

the abm cannot proceed with my transaction because
of "some technical difficulties..." whatever that is.
:yell:

my guess?

someone made an "ABM BANK RUN" at that machine
and took all the cash inside. now, i cant withdraw.
good thing, that i dont need the money for emergency.

what is the average cash that an ABM holds per day anyway?
$10,000? $20,000???

July 2, 2010
4:31 pm
Doug
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It depends on the denominations an ABM carries. Some institutions stock them with all twenties (most common) while others stock them with fifties, twenties and tens. I've yet to see an ABM dispense hundreds but I suppose it's possible.

If you stocked the cassettes with all twenties and assuming it has four cassettes (again, most common but others may have more), then one ABM could conceivably be stocked with $160,000. Unless it was an insanely busy ABM, it would be unlikely the FI would stock it to that level for security purposes and to lower their risk.

Most FIs, however, set maximum daily ABM withdrawal amounts (some, including Scotiabank, have weekly amounts) and maximum daily Interac Direct Payment amounts for your bank card but also have maximum amounts you can withdrawal per instance (generally $500.00 for the Big Five banks, $300.00 for white label ABMs). If you wanted more than the maximum dispense per instance, you would need to do another withdrawal (up to and including your own daily maximum). Nonetheless, I've yet to see an FI that will give you a daily ABM withdrawal limit higher than $2000 per day and that's for their very best, "cream of the crop" customer. If you want more than that, you can go into a bank and ask for any amount from a CSR. Keep in mind, though, unless you make a special cash order in advance - and the bank does have a right to pass along the armoured car shipping costs for that special order, if it is a large cash request (generally over $10,000) the bank can limit the amount you want to withdraw as cash and give you a bank draft in lieu of cash at no cost to you.

Cheers,
Doug

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