“If I have $600,000 deposited in a bank and the bank goes bankrupt, I am guaranteed to get back $100,000. How can I be sure I will get the $600,000 back?” – Robert Bigoux
Will a Canadian bank go bankrupt? It's rare, but it's happened before and it could happen again. The Canada Deposit Insurance Corporation (CDIC) says it has handled 43 financial institution bankruptcies affecting more than two million depositors since its inception in 1967.
This federal crown corporation protects anything that is considered an insurable deposit. Please note that the institution concerned must be a member of SADC. The full list can be found on the company's website, but the names of the country's six main banks (Royal Bank, BMO, Scotia, CIBC, TD and National Bank) appear there.
The insurable deposit is protected up to $100,000 per member institution and per category. As for Desjardins Group – a cooperative financial group – the Financial Markets Authority is the one that protects insurable deposits ($100,000).
If you want to reduce your risk, asset allocation is your lifeline. Matthew Larocque, senior communications director at SADC Group, points out that there are nine eligible categories.
Insurable categories:
- Deposit in the name of one person
- Joint (joint accounts)
- Registered Retirement Savings Plan (RRSP)
- Registered Retirement Income Fund (RRIF)
- Tax-Free Savings Account (TFSA)
- Registered Education Savings Plan (RESP)
- Tax-free savings account for first property purchase (CELIAPP)
- Registered Disability Savings Plan (RDSP)
- Insurable deposits held in trust.
“Anyone can deposit $100,000 in each of these categories,” Mr. Larocque explains. This is for each of the member financial institutions. Therefore, we can repeat the process in different member institutions. »
On its website, SADC also offers an online calculator that can help savers determine their level of cover.
Consult the SADC calculator
A Southern African Development Community spokesperson points out the importance of savers understanding the concept of an “insurable deposit.” These are Canadian dollars and other currencies, secured investment certificates or other time deposits.
Stocks, bonds, mutual funds or virtual currencies held in non-registered accounts are not insured by a federal crown corporation in the event of a bank failure.
“What are considered investment products are not protected by SADC,” its spokesperson explains. There are other programs that protect this, but we are not the ones that secure this type of product. »
The depositor should therefore inquire about other measures available, such as the Canadian Investor Protection Fund – which provides limited protection on property held by a dealer member on behalf of an eligible client – if he holds investment products in his accounts.
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