# Is it safe to put more than 100K in one bank?



## Jay3 (Jul 16, 2013)

I have roughly 40K in TFSA, 50K in a GIC and 10K in the high interesr savings account all at same bank.

I know only 100K is CIDC insured, however if I go over that amount and put the money in a liqued account like the HISA, is it conceivable to withdraw my money before god forbid the bank went out of business? Would there be a fair warning from the bank that they were going under? Or one say theyre up and running the next theyre not?


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## OptsyEagle (Nov 29, 2009)

Jay3 said:


> Or one day theyre up and running the next theyre not?


That is exactly how it will work. Usually the Federal regulator comes in and takes over a struggling bank long before the bank itself feels it has gone past the point of no return.

To answer the basic question. I would never put more then $100,000 on deposit with any bank type entity that is covered by CDIC and I would never put anything with a bank type entity that is not covered. These are very highly leveraged institutions. 

They would never allow you personally, to take on the same leverage, that they assume everyday, for the same pathetic interest rate that they offer, so why would you allow them, the same thing?

All my opinion of course.


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## cainvest (May 1, 2013)

Best to read what CDIC covers and how much for each category -> http://www.cdic.ca/Coverage/Infographic/Pages/default.aspx

So based on that, you're under your 100k category limit.


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## Eclectic12 (Oct 20, 2010)

It is hard to say ... the last CDIC member to fail was Security Home Mortgage Corporation in 1996.

If you want CDIC member banks that failed from 1967 to present - there is:
Bank of Credit and Commerce Canada in 1991, 
Bank of BC in 1986, 
Canadian Commercial Bank & Northland Bank both in 1985 ... so there's nothing recent and not a lot in the last forty eight years to give an idea.

http://www.cdic.ca/WhereInsured/FailureHistory/Pages/default.aspx


Then too ... depending on what the TFSA $40K is invested in ... say a MF, it may not be covered by CDIC at all.


If CDIC coverage is important to you - as you go over the $100K mark, you could setup no fee/low fee accounts at other CDIC covered institutions or subsidiaries.


Cheers


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## Letran (Apr 7, 2014)

Jay3 said:


> I have roughly 40K in TFSA, 50K in a GIC and 10K in the high interesr savings account all at same bank.
> 
> I know only 100K is CIDC insured, however if I go over that amount and put the money in a liqued account like the HISA[/QUOTE
> 
> ...


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## CPA Candidate (Dec 15, 2013)

When was the last Canadian bank collapse?


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## GreatLaker (Mar 23, 2014)

Likelihood = Low
Consequences = High (especially if you go a lot over the 100k limit)
Cost of avoiding the risk = 0 (bank accounts are generally free if minimum balance is maintained)
So why even consider taking the risk?

Although read carefully the link that cainvest provided to ensure you understand the coverage - TFSAs and RRSPs each have their own $100k coverage, plus all non-registered is covered to a total of $100k. And for a couple, each individual has their own coverage, plus joint accounts are also covered separately.


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## GreatLaker (Mar 23, 2014)

CPA Candidate said:


> When was the last Canadian bank collapse?


The answer is 2 posts above yours:
http://canadianmoneyforum.com/showthread.php/36162-Is-it-safe-to-put-more-than-100K-in-one-bank?p=570362&viewfull=1#post570362


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## Causalien (Apr 4, 2009)

Cash are insured by CDIC. The assets/Securities are insured by CIPF.

i've done this investigation in 2009. If you have multiple accounts, each account's limit is 100k. So checking, TFSA and RRSP is 300k total. Understand that CDIC only insures the cash part while securities are insured by CIPF.

However.... the catch.

The CDIC's war chest is not enough to cover the deposits of any of the big 5. What we saw in the US when this happened is that the FDIC (usa equivalent of CDIC)had to borrow from the fed for the short term and levie extra charges on the rest of the banks to replenish the war chest over the next 5 years.

Also, foreign cash is not insured. So those of us with foresight and converted to USD are completely at risk.

In Cyprus, we all heard about the bail in. What people don't remember is that the bail in were first proposed to be levied on all deposits.Irregardless of whether or not you are under the 100k limit. And a law has to be passed for this to be done. Only after rioting did they change it to any deposit above 100k. Most business accounts got destroyed and closed up shop. This destroys your commercial sector.

So whether or not everything goes smoothly depends on several entities. The central bank has to be able and willing to lend. Which means the facility has to exist in the first place to lend to the bank. Fed had the bazook a.k.a. the bailout law back then giving them 500 bil war chest. Then the backlash from the surviving banks against the FDIC levies has to be overruled. I would just diversify across several banks and move your long term money or asset that will not be touched for a while into other institutions.

CIPF have a much smaller war chest. So its ability to cover assets is really questionable. Since most people have more assets than cash I worry about this far more than CDIC. This is because we trust the brokerage to maintain the maringold line between customer deposits and brokerage's own assets. Recent write down of IB and that other brokerage from CHF unpegging suggests that this one can be breached easily.

The damages to your assets though will probably not come from the liquidation, but rather from having assets frozen while it is sorted out in bankruptcy that can take up a year. Canadian customers in Bernie Madoff's (or was it Corzone can't remember) fund were refunded immediately without waiting for the bankruptcy process, but that's because the Canadian customers in the us fund were relatively small. If a direct hit happens in Canada, it'll be another story.

Not that what I said will happen, but every safety measure has its own breaking points. I am just pointing them out.


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## m3s (Apr 3, 2010)

^ Good post


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## AltaRed (Jun 8, 2009)

Causalien said:


> The assets are insured by CIPF.
> 
> i've done this investigation in 2009. If you have multiple accounts, each account's limit is 100k. So checking, TFSA and RRSP is 300k total. Understand that CDIC only insures the cash part while securities are insured by CIPF.


I think the OP was talking about bank accounts, not brokerage accounts. CIPF does not cover bank deposits. It is correct that CDIC coverage is by 'account type', not per account. A TFSA is a different account type since it is a trust much like RRSP coverage is yet another account type. One could have $100k in GICs in Bank A in a TFSA, $100k in GiCs in Bank A in a RRSP, and $100k in deposit accounts (GICs, checking, savings in aggregate) in Bank A and be covered. Another $100k can be protected in joint JTWROS deposit accounts (GICs, checking, savings) in Bank A.

CIPF coverage is for protection against fraud, etc. and is generally associated with brokerage accounts, but does not guarantee the individual deposits themselves from market loss.

The OP is easily protected in this case because TFSA coverage is separate from the 2 deposit accounts.

One should never think they can 'beat the run on the bank' in times of crisis. Better to keep within CDIC limits. Note that with the big banks, GICs (and HISAs) held in the various companies of the parent company are separately CDIC insured. The big 5 all have the primary bank company, a mortgage company and a trust company. That is like 3 companies in one. Just spread the deposits around in the various entities for more CDIC coverage than one can imagine.


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## NorthernRaven (Aug 4, 2010)

AltaRed said:


> I think the OP was talking about bank accounts, not brokerage accounts. CIPF does not cover bank deposits. It is correct that CDIC coverage is by 'account type', not per account. A TFSA is a different account type since it is a trust much like RRSP coverage is yet another account type. One could have $100k in GICs in Bank A in a TFSA, $100k in GiCs in Bank A in a RRSP, and $100k in deposit accounts (GICs, checking, savings in aggregate) in Bank A and be covered. Another $100k can be protected in joint JTWROS deposit accounts (GICs, checking, savings) in Bank A.
> 
> CIPF coverage is for protection against fraud, etc. and is generally associated with brokerage accounts, but does not guarantee the individual deposits themselves from market loss.
> 
> ...


However, it is quite possible that if you have CDIC-insured deposits (an ISA) or GICs in your brokerage account, those are on a separate CDIC limit total than your regular deposits at the same institution. It has to do with them being in "nominee" (or "street") name in trust, which (like a joint account) has a separate CDIC protection. There's another thread about this lately.

Also, at some of the big banks it is possible your HISA and your GICs are with separate CDIC subsidiaries - bank account might be BMO Trust and GICs might be BMO Mortgage. If calculating limits you'd want to check.

Finally, going over $100,000 doesn't invalidate coverage. If you have $110,000 in Scotiabank and it goes bust (along with the comet hitting and the zombies attacking), the very worst that could happen is you get back $100,000 and lose $10,000, not lose it all because you were "over". As ever, this is merely a technical observation, not urging against prudence...


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## fatcat (Nov 11, 2009)

AltaRed said:


> I think the OP was talking about bank accounts, not brokerage accounts. CIPF does not cover bank deposits. It is correct that CDIC coverage is by 'account type', not per account. A TFSA is a different account type since it is a trust much like RRSP coverage is yet another account type. One could have $100k in GICs in Bank A in a TFSA, $100k in GiCs in Bank A in a RRSP, and $100k in deposit accounts (GICs, checking, savings in aggregate) in Bank A and be covered. Another $100k can be protected in joint JTWROS deposit accounts (GICs, checking, savings) in Bank A.
> 
> *CIPF coverage is for protection against fraud, etc. and is generally associated with brokerage accounts, but does not guarantee the individual deposits themselves from market loss.*
> 
> ...


lets be clear here about cipf ... cipf protection functions in the case of *bankruptcy* and it covers assets like stocks, bonds and cash


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## Jay3 (Jul 16, 2013)

So I am covered up to 100K in my TFSA and also 100K in my GIC and HISA even though theyre all with Peoples Trust?


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## NorthernRaven (Aug 4, 2010)

Jay3 said:


> So I am covered up to 100K in my TFSA and also 100K in my GIC and HISA even though theyre all with Peoples Trust?


Yes, your Peoples TFSA is a separate $100,000 limit from your regular (non-registered) GIC and HISA with Peoples.
You would also have a separate $100,000 for an RRSP at Peoples. And you and a spouse could have joint accounts in those categories with Peoples, each with separate $100,000 limits from your individual accounts.


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## Causalien (Apr 4, 2009)

Jay3 said:


> So I am covered up to 100K in my TFSA and also 100K in my GIC and HISA even though theyre all with Peoples Trust?


GIC of duration under 5 years. HISA... I don't think I read anything about HISA.

Alta Red. If you read the rest of my post. I mentioned the division. Cash = CDIC, Assets/securities = CIPF.. Just saw some typos now. Will go fix.


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## NorthernRaven (Aug 4, 2010)

Causalien said:


> GIC of duration under 5 years. HISA... I don't think I read anything about HISA.
> 
> Alta Red. If you read the rest of my post. I mentioned the division. Cash = CDIC, Assets/securities = CIPF.. Just saw some typos now. Will go fix.


A *H*igh *I*nterest *S*avings *A*ccount (HISA) is just a demand deposit (i.e. bank account), fully covered by CDIC.


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