The Canada Deposit Insurance Corporation is reducing the premiums charged to its member institutions by 50% for the 2002 premium year.
The reduction will apply to the differential premium rates for all members, which include member banks, federally incorporated trust and loan companies, and provincially incorporated trust and loan companies.
Premiums are fixed annually, based on CDIC’s membership risk profile, the economic environment and the corporation’s own financial condition.
CDIC had a surplus of $455 million, as well as a provision for insurance losses of $400 million at March 31, 2001. This is largely the result of not having had a member institution failure in six consecutive years.
“CDIC was required to increase premiums charged to its members when it incurred losses as a result of failures in the 1980s and 90s,” said Jean Pierre Sabourin, president and CEO. “Given our current financial circumstances, CDIC believes it is now appropriate to reduce deposit insurance premiums once again.”
Member institutions pay premiums based on the premium category in which they are placed according to the amount of insured deposits they have as at April 30 in the year for which the premiums are assessed. The better the premium category, the lower the premium rate.
The premium rates for the 2002 premium year are:
- 1/48th of 1%, or 0.0208%
- 1/24th of 1%, or 0.0417%
- 1/12th of 1%, or 0.0833%
- 1/6th of 1%, or 0.1667