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Foreign banks raising their profile here
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These days it is almost as easy to do business at a foreign bank as it is to walk into one of Canada’s large chartered banks. Foreign banks have been raising their profile in Canada. From 1997 to 2004, foreign-controlled banks grew steadily and increased their share of the Canadian banking market to about 8%.
In 1999, the federal government allowed foreign-controlled banks to establish full-service branches in Canada, enabling international banking firms to offer a much wider range of financial services. Today, the Canadian banking industry includes 21 domestic banks, 26 foreign bank subsidiaries and 19 full-service foreign bank branches.
Foreign and domestic banks alike have been taking advantage of Canada’s recent low interest rates, which have expanded the entire financial services market. Fuelled by increased consumer lending, the fastest growing foreign banks have been those offering credit card services and other electronic financial services, as well as those offering corporate and institutional finance.
But the foreign banks’ expanding market share has been the work of a handful of companies. The operations of just six foreign banks accounted for 80% of the value of services provided: most of them grew at an annual average rate of 10% or more.
Still, home-grown banks continue to dominate Canada’s financial services market. They have lost only a relatively small slice of market share to foreign banks, despite the latter’s strong growth. Canadian banks are still seeing the total real value of their services expand by about 2% annually.
