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Canadian Imperial Bank of Commerce
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Globe says Big Six banks hear "bail-in" explained

2013-04-08 06:01 ET - In the News

Also In the News (C-BMO) Bank of Montreal
Also In the News (C-BNS) Bank of Nova Scotia
Also In the News (C-LB) Laurentian Bank of Canada
Also In the News (C-RY) Royal Bank of Canada
Also In the News (C-TD) Toronto-Dominion Bank

The Globe and Mail reports in its Saturday, April 6, edition that Ottawa's plan to create a safety net, or "bail-in" mechanism, for Canada's banks involves a new kind of investment similar to bonds that will be sold to large institutional investors. The Globe's Grant Robertson writes the plan will give banks access to emergency capital to keep themselves solvent in the event of a major crisis. Unnamed sources say the concept is designed to prevent deposits or taxpayer money from being used to stabilize a bank. In its latest budget Ottawa said it would enact a bail-in regime in which a failing bank would use certain "liabilities" in order to stabilize itself. Since deposits are one form of bank liability, that wording prompted immediate comparisons to the banking crisis in Cyprus, where the government ordered banks to draw upon the accounts of large depositors for emergency funds. While the term "bail-in" has been used in both cases, Canadian officials want to distance their plan from any that would use consumer deposits for capital. Amid questions about the plan, a Finance Minister spokesman said no consumer bank deposits would be drawn upon in the Canadian bail-in scenario.

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