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Manitoba Credit Unions - Best, Better, So So - VS Oaken or Peoples Trust
February 4, 2016
10:23 pm
Loonie
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There is risk throughout the Canadian economy right now due to the failure of the petro-economy.
Housing prices in Vancouver and Toronto, where there are a great many mortgages issued by chartered banks, are hugely inflated and likely to fall significantly.

However, some of the big banks have made much riskier investments overseas, and in things most of us are not familiar with. When they fail, they just shrug their corporate shoulders and move on. After all, it's not their personal money. Credit unions are run by members who have their own money on the line. I find this a more appealing arrangement.

February 5, 2016
5:13 am
xxxx
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Loonie said
However, some of the big banks have made much riskier investments overseas, and in things most of us are not familiar with. When they fail, they just shrug their corporate shoulders and move on. After all, it's not their personal money. Credit unions are run by members who have their own money on the line. I find this a more appealing arrangement.

Which "riskier investments overseas" specifically are you referring to? and by which of the big banks? I would be interested to know which overseas investments you are referring to. Thx.

February 5, 2016
8:29 am
Loonie
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My reference is historical, based on items that were in the news at the time. I did not retain the details and don't have any interest in trying to retrieve them as I am satisfied with what I remember. It has happened more than once and involved different banks.

I don't know how much detail they provide in their annual reports, but perhaps you can find information there about their current overseas interests and can evaluate them accordingly. As a shareholder, you ought to be able to find out, I would think.

February 5, 2016
9:27 am
xxxx
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I did have the feeling you would not be able to provide just one example of ALL these "riskier investments overseas" which you indicated to have read in the news. Of course, banks (as well as most other businesses) do make investments which have risks (of varying degrees from very low, to moderate and higher) - fortunately, the major banks have a sufficient mix of profitable investments and operations to result in a very positive bottom line to benefit shareholders.

February 5, 2016
10:04 am
Loonie
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Brian said

I did have the feeling you would not be able to provide just one example of ALL these "riskier investments overseas" which you indicated to have read in the news. Of course, banks (as well as most other businesses) do make investments which have risks (of varying degrees from very low, to moderate and higher) - fortunately, the major banks have a sufficient mix of profitable investments and operations to result in a very positive bottom line to benefit shareholders.

I really didn't think you were asking because you expected an answer. Anyone who wants to know can, I'm sure, research it themselves.

I'm glad you agree however that they do make high risk investments overseas.

Personally, as I said, I am more comfortable with institutions that don't do this.

February 5, 2016
10:52 am
NorthernRaven
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One really needs to do a bit of quantitative sorting of these sorts of "risks":

  1. some areas underperform, putting the CEO's giant bonus at risk. Boo hoo hoo.
  2. housing downturn, recession, or some bad bets don't work out, share prices or big dividends at risk. Boo hoo hoo
  3. Things get serious enough to threaten capital levels.
  4. Things get serious enough to threaten solvency

Only the last is of concern to deposit worriers. I doubt any of the Big5 are exposed to that much bad stuff. Similarly for the Manitoba CUs, I tried a really loose back of the envelope calculation in trying to make one go insolvent, and it didn't seem that feasible. If you own banks shares or are worried about CMHC, that's a different matter, but I personally wouldn't make deposit decisions worried about, say, Scotiabank's woes in Latin America.

February 5, 2016
11:32 am
Loonie
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I believe you posted some helpful info on this a while back, NorthernRaven, but not sure where it is!

As you suggest, it's a personal decision.

I'm not really interested in getting into a lengthy discussion of what makes me, personally, uncomfortable. That would involve putting these international investments into a whole discussion of the banking industry, ethics, the nature of our economy, global political economy, regulatory mechanisms, etc etc. I'm not prepared to go into that level of detail.

February 26, 2016
7:11 pm
dentgal
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I don't see "outlook", "achieva", etc on the CDIC website....am i missing something???

February 26, 2016
7:19 pm
kanaka
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dentgal said

I don't see "outlook", "achieva", etc on the CDIC website....am i missing something???

Outlook is a credit union.

February 26, 2016
7:51 pm
NorthernRaven
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dentgal said
I don't see "outlook", "achieva", etc on the CDIC website....am i missing something???

Credit unions are covered by their respective provincial deposit guarantee systems, not CDIC. Most credit union HISA's of interest to those looking for high rates are in Manitoba, which would be the Deposit Guarantee Corporation of Manitoba (DGCM).

Everyone has to come to their own conclusion regarding non-CDIC deposit insurance. If one doesn't want to bother evaluating, the safe default is just to stay with CDIC. Personally, I've done a good bit of poking around (here, here), and I can't see how anything short of an unprecedented catastrophic economic meltdown in Manitoba could possibly have any effect on the guarantee system, but I don't make recommendations one way or the other.

For various reasons, Manitoba CUs historically pay the best non-promo savings rates in the country (currently 1.75%). With the new entrants like Zag and EQ doing promos you can chase accounts right now and do better than this in the short term and still have CDIC coverage.

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