Canadian Banks vs. U.S. Banks: How Do They Differ?

First of all, Canadian banks have a larger share of loans, making them safer than American financial institutions. They are also well-capitalized and are required to maintain certain levels of capital and capital buffers and liquidity as a collapse-preventive measure. Domestically Systemically Important Banks, (D-SIB’s) which control more than 85% of the domestic assets, also enjoin banks to have at least 3% of their total risk-weighted assets as the domestic stability buffer. The World Economic Forum in 2008 called the Canadian banking system the world's safest.

However, nothing is 100% guaranteed. To prevent losses, it's recommended to choose a bank from the "Big 6," which includes Toronto Dominion, Canadian Imperial Bank of Commerce, Bank of Nova Scotia, Bank of Montreal, Royal Bank of Canada, and National Bank of Canada.

The U.S. boasts a robust financial landscape with over 7,000 domestic banks, complemented by numerous private and online lending institutions. In addition to traditional banking, various connecting services, including prominent names like 1F Cash Advance, play a significant role in the lending ecosystem. On the other hand, Canada's banking sector is more streamlined, comprising approximately 35 domestic banks. This leaner structure reduces competition among Canadian banks, contributing to the establishment of a stable financial system less susceptible to savings and loan crises. Moreover, within Canada's lending landscape, notable entities like Loans Canada further enrich the financial landscape, providing diverse options for individuals seeking loans and financial assistance.

The Canadian financial system is more focused on safety and soundness. In contrast, U.S. regulations pay more attention to anti-money laundering, privacy, banking access, and consumer protection. Additionally, relationships between banks and regulators in Canada are more collegial.

Although this difference doesn't affect the financial system, it may be useful for you if you're banking in a neighbouring country. Unlike Canadian bank accounts the U.S. bank account statements usually have two balances. The actual one displays the amount of money you have in your account at the moment. The ledger balance also includes some transactions and amounts that haven't yet been posted as they were made by the bank cut-off times.

While the Canadian market is worth $142 billion CAN, the U.S. market is valued at $1.4 trillion USD, which is almost ten times more. The Canadian banking system is focused on growth opportunities and, therefore, tends to expand internationally, primarily in the U.S.A. The American banking system, at the same time, is more focused on the massive domestic market growth.

U.S. banks have lower leverage than Canadian peers as they have shown more conservative approaches during the post-crisis period. Therefore, they have spent the past number of years building capital. Canadian banks were not as impacted by the Financial Crisis, so they were able to use lower risk weights.

In the U.S., your deposit is ensured by the Federal Deposit Insurance Corporation (FDIC). To protect depositors' accounts, the FDIC guarantees up to $250,000 USD safety per depositor for each deposit ownership type in each insured bank. In contrast, deposits made at Canadian banks are insured by the Canada Deposit Insurance Corporation (CDIC) up to $100,000 CAN.