(March 10 – 14:05 ET) – The Canada Deposit Insurance Corp. (CDIC) has authorized J.P. Morgan Canada and Rabobank Canada to opt out of CDIC membership.
Recent amendments to federal legislation enable a bank that accepts only wholesale deposits to operate without deposit insurance. Wholesale deposits are defined as $150,000 or more. CDIC’s by-laws include extensive provisions for any existing bank that chooses this option to inform depositors who hold CDIC-insured products.
Authorization to accept wholesale deposits payable in Canada without being a CDIC member is granted only if certain statutory conditions have been met, including the requirement that the bank’s total retail deposits (those below $150,000) are less than one percent of its total deposits.
“Depositor awareness is a key concern,” said CDIC President and CEO Jean Pierre Sabourin. “While allowing greater flexibility to financial institutions, the opting-out by-laws also include meaningful provisions to ensure that depositors are well aware that their deposits are not insured and that they are given options.”
CDIC insures eligible deposits up to $60,000 per person at each member institution in case of failure. To be eligible for deposit insurance protection, deposits must be in Canadian currency and payable in Canada, and term deposits must be repayable no later than five years from the date of deposit.
– IE Staff