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Do you go over CIDC limit with this bank?
October 12, 2019
7:45 pm
Doug
British Columbia, Canada
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As far as Continental Bank of Canada goes, yeah that was another of the failed banks that HSBC Bank Canada snapped up (besides Prenor Trust and Bank of British Columbia). As far as I'm aware, no deposit insurance funds had to be tapped and no one lost money. 🙂

The current Continental Bank of Canada, controlled by Eric Sprott through Continental Currency Exchange Corp., is currently in discontinuance proceedings to continue and amalgamate with its non-regulated parent, Continental Currency Exchange Corp. Along with Zag Bank, that discontinuance notice could come from OSFI any day now.

Cheers,
Doug

October 13, 2019
8:41 am
Norman1
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Continental Bank of Canada didn't actually fail. Like the Home Trust situation, there were no serious loan losses.

The bank experienced a run like Home Trust did. Bank of Canada provided the bank a liquidity backstop, like Berkshire Hathaway provided to Home Trust. That tied them over until Lloyds Bank purchased the bank.

October 13, 2019
8:56 am
Norman1
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Doug said
Thanks, Norman. Yeah, the biggest risks are actually with most of the Canadian credit unions. I think Meridian Credit Union and Coast Capital Savings Federal Credit Union are rated about the same as, slightly higher than, or possibly lower than, Home Trust Company and Home Bank. In fact, Desjardins is the highest rated "credit union" in Canada and I think that gets them, maybe BBB+? Haven't looked lately though.

Unfortunately, Meridian Credit Union is unrated by DBRS. Unknown level of risk.

Coast Capital Savings Federal Credit Union has DBRS rating of BBB(high). Fédération des caisses Desjardins du Québec has a DBRS rating of AA.

Regulation is better these days. But, a fund to cover deposits or, more accurately, losses on the loan book, is still needed in case the assets (including the loan book) dip below the liability for the deposits by the time the regulators act.

October 13, 2019
1:18 pm
Doug
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Norman1 said
Continental Bank of Canada didn't actually fail. Like the Home Trust situation, there were no serious loan losses.

The bank experienced a run like Home Trust did. Bank of Canada provided the bank a liquidity backstop, like Berkshire Hathaway provided to Home Trust. That tied them over until Lloyds Bank purchased the bank.  

Ah, okay, and then Lloyds Bank was purchased by HSBC Bank Canada. Where'd you find that history, Norman?

Back when I worked at HSBC, several long-time colleagues began at Continental and became HSBC employees when they purchased the assets. Supposedly, Continental had one of the better DB pension plans (HSBC has several such closed plans).

Cheers,
Doug

October 13, 2019
1:25 pm
Bud
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Anybody know Laurentian rating?

October 13, 2019
7:17 pm
Doug
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Bud said
Anybody know Laurentian rating?  

https://lbcfg.ca/investors-centre/credit-ratings/

DBRS rates "A"; S&P rates "BBB". So, Desjardins rates higher than Laurentian (including B2B Bank) in deposits.

Note, too, that S&P's "outlook" (what they are examining for the future) is "negative," which means they could likely cut their rating one (or more) notches. DBRS ratings "outlook" is "stable".

Cheers,
Doug

October 14, 2019
8:58 am
Norman1
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Doug said

Ah, okay, and then Lloyds Bank was purchased by HSBC Bank Canada. Where'd you find that history, Norman?

From memory. I had an account at Continental Bank which became a Lloyds Bank Canada account.

Canadian Encyclopedia: Continental Bank of Canada has a good article about the Lloyds Bank Canada transaction. Apparently, there was a complication with Revenue Canada. So, Lloyds Bank Canada purchased most of the assets and assumed the deposits in 1986, instead of just buying up all the shares of the bank.

What was left was eventually continued as CBOC Continental Inc until the Revenue Canada dispute was settled by the Supreme Court in September 1998, twelve years later (Continental Bank of Canada v. Canada, [1998] 2 S.C.R. 358)!

October 14, 2019
9:06 am
Norman1
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Doug said

https://lbcfg.ca/investors-centre/credit-ratings/

DBRS rates "A"; S&P rates "BBB". So, Desjardins rates higher than Laurentian (including B2B Bank) in deposits.

B2B Bank does not have any debt rating.

B2B Bank is actually a separate Schedule I bank, with its own CDIC membership, that is owned by Laurentian Bank of Canada. B2B Bank is not the name of a division or department within Laurentian Bank.

Unless its parent, Laurentian Bank of Canada, guarantees the deposits of B2B Bank, one cannot use the parent's debt ratings for the B2B Bank deposits.

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