VANCOUVER, B.C. – With the Vancouver Board of Trade issuing a warning to its clients, and with the federal government expected to announce new measures on Friday to curb the flow of low-cost foreign money into Canadian banks, a new study released by the Bank of Montreal has found that the vast majority of large Canadian banks are still able to charge foreign clients more than they would pay them.
“There is little reason for Canadian banks to raise rates, especially given the recent moves by the federal and provincial governments to cut the flow and tighten controls on offshore capital flows,” said Dan Regan, head of research for Bank of America Merrill Lynch.
Regan’s study is based on data from the bank’s data platform and was presented Monday to the Royal Bank of Canada’s annual conference in London.
The bank, which has its headquarters in Vancouver, Canada, said it had been asked by the B.K. Chestnut Foundation to conduct the study.
In 2015, the Bank found that of the banks surveyed, only three – HSBC Canada, HSBC Holdings Inc. and Bank of Nova Scotia – have been able to provide a comparable rate to Canadian banks.
Reham said the Bank also found that banks are being forced to use more of their reserves in a year than they could have done previously.
“When we looked at all banks, they all had the same number of reserves,” Regan said.
The Bank of Toronto, the country’s largest Canadian bank, said that it had recently increased its foreign account rate to help it meet regulatory requirements in the wake of the Brexit vote. “
It’s not a coincidence that we found that all the banks we looked into had the highest reserve ratios in 2016.”
The Bank of Toronto, the country’s largest Canadian bank, said that it had recently increased its foreign account rate to help it meet regulatory requirements in the wake of the Brexit vote.
“We continue to do business with clients overseas in a way that helps ensure our customers have access to our services,” a spokesman for the bank said in a statement.
The Bank said it expects that interest rates will likely stay low through at least the end of 2017.
With files from The Associated Press