[Eug]

If you're looking for a safe place to put your money:

Countries with the world's safest banking systems (according to the World Economic Forum)

1. Canada
2. Sweden
3. Luxembourg
4. Australia

40. USA (behind Chile and Namibia)
44. Britain

[tie]

The title of the article says "sound" not "safe." From a depositor's perspective, you want a high rate of return and insurance. Canadian banks give you terrible returns, with much higher fees than American banks, and the CDIC has worse insurance than the FDIC.

[Eug]

Well, "sound" vs. "safe" is the same thing to me. If you are arguing they're different, then that's just semantics, and neither is synonymous with "high return". My posted bank fees are indeed higher than the US's on average, but then again, I pay no fees at all because I keep a fair amount of cash in the account as a reserve. (Well, I lie actually. I recently got charged a monthly fee one month because my balance went lower than it usually was that month.)

The high interest accounts of Canadian banks have OK returns compared to mainstream US banks, although not stellar. As for the FDIC vs. CDIC, both are insurance for $100000, although Canada's $100000 is only worth US$89000 at the moment because of the exchange rate.

[Sayf-Allah]

What? No Iceland!?

BS report!

[tie]

No, sound is not the same as safe. As long as your money is safe, you don't care about whether the bank is sound or not. Where do you bank?

I have several US bank accounts and one Canadian account. When I looked into Canadian banks, I was rather stunned at how poorly competitive they were. Even those that offered no fees with minimum balances often didn't give you interest on that minimum balance so you really were paying a fee (the lost interest). I ended up with PC Financial (owned by CBIC) and am still amazed at how lame their online banking is---e.g., you can't transfer money immediately between accounts.

As you said, the CDIC only insures less than US$90,000 (at current exchange rates). Contrary to what you said, the FDIC insures $250,000.

[Eug]

Originally Posted by tie 

As you said, the CDIC only insures less than US$90,000 (at current exchange rates). Contrary to what you said, the FDIC insures $250,000.

FDIC is $100000, with a temporary emergency shift to $250000 to weather this crisis.

No such crisis exists in Canada.

[Eug]

Originally Posted by Sayf-Allah 

What? No Iceland!?

BS report!

Iceland ranked 36, ahead of the US.

http://www.weforum.org/documents/GCR0809/index.html

1. Canada
2. Sweden
3. Luxembourg
4. Australia
5. Denmark
6. Netherlands
7. Belgium
8. New Zealand
9. Ireland
10. Malta
11. Hong Kong
12. Finland
13. Singapore
14. Norway
15. South Africa
16. Switzerland
17. Namibia
18. Chile
19. France
20. Spain

124. Kazakhstan
125. Cambodia
126. Burundi
127. Chad
128. Ethiopia
129. Argentina
130. East Timor
131. Kyrgyz Republic
132. Lesotho
133. Libya
134. Algeria

[finboy]

Originally Posted by Eug 

If you're looking for a safe place to put your money:

Countries with the world's safest banking systems (according to the World Economic Forum)

1. Canada
2. Sweden
3. Luxembourg
4. Australia

40. USA (behind Chile and Namibia)
44. Britain

I'd be careful taking the WEF's word for anything. Plus, folks in the US expect a little bit more in the way of service & convenience than they get in 1 or 2, although I don't know anything about 4. 3 is basically the entire economy of the country in question.

[Eug]

The interest rates are supposed to be a little better in the US, but I don't see the service as being any better, at least for standard consumer accounts. Specifically, the local podunk banks in the US seem to have a nasty habit of screwing up foreign exchange transactions. It's happened to a couple of friends of mine. The local US bank forgets to change the transaction's currency when transferring to a foreign account. So, $1000 US gets deposited as $1000 Canadian, and 10% difference in the currency value simply disappears into oblivion. I didn't even know this was possible, but those banks managed to do it nonetheless.

I don't think I've ever seen the reverse happen.

Also, in Canada most of the banks are quite large, and national. What this means is that you can usually find a branch of your bank close by. So, you can usually avoid ATM transaction fees anywhere in the country (depending on what type of account you have).

But anyway, this is not a measure of the convenience of the banks. It's a measure of the safety. And indeed, AFAIK, no bank in any of those top 4 countries has failed.

[Chuckit]

Originally Posted by Eug 

The interest rates are supposed to be a little better in the US, but I don't see the service as being any better, at least for standard consumer accounts. Specifically, the local podunk banks in the US seem to have a nasty habit of screwing up foreign exchange transactions. It's happened to a couple of friends of mine. The local US bank forgets to change the transaction's currency when transferring to a foreign account. So, $1000 US gets deposited as $1000 Canadian, and 10% difference in the currency value simply disappears into oblivion. I didn't even know this was possible, but those banks managed to do it nonetheless.

Awesome, deposit 10,000 yen.

[Eug]

Originally Posted by Chuckit 

Awesome, deposit 10,000 yen.

Won't work. You'd transfer $10000 into a Japanese account, and get 10000 yen.

However, I suppose you could try transferring $10000 into a UK account, and get £10000.

However, since it's a UK account, the bank might go under.

[finboy]

Originally Posted by Eug 

It's a measure of the safety. And indeed, AFAIK, no bank in any of those top 4 countries has failed.

Yet.

Again, US consumers want everything for nothing and usually manage to get close. WaMu was a good example. Podunk banks have trouble doing C$ transactions b/c it ranks pretty low on the customer service priorities of most of them.

OMG I just saw the "data". It's an OPINION. Holy crap. Not a measurement of anything tangible, but some pollster's results. No wonder.

[Eug]

Originally Posted by finboy 

Yet.

We'll see. In the meantime:

Fed trolls Canada to rescue U.S. banks

In a desperate bid to help U.S. banks recapitalize, Washington is dropping its inhibitions and reaching out to Canadian financial institutions to gauge their willingness to participate in rescue operations.

The Federal Reserve has activated a back channel that puts the central bank in direct contact with chief executives at Canada's largest banks and insurers, according to a person familiar with the dialogue.

They are approaching "banks with major assets in the U.S. like [Toronto-Dominion Bank] and Royal [Bank of Canada], because when they have a bailout situation they want everyone who is a potential buyer to look at it," the source said.

The ongoing conversations between the U.S. central bank and Canadian executives reflects the challenge facing Washington as it seeks to address both short-term liquidity and permanent capital needs of financial institutions crippled by more than $500-billion in losses and limited access to financing.

The communications have included phone calls from Fed officials pitching potential sales of assets of U.S. financial companies and at least one intensive discussion of a major rescue operation, according to people familiar with the contacts.

---

Anyways, I find it a little odd that despite all this turmoil there is little being reported about tightened regulations. I'm sure they're discussing it, but why is this not front and centre? Everything is about the bailouts, but I hear very little in the US media about what's being done to address the underlying problem.

[Big Mac]

Why are UK banks ranked below US banks?

[Eug]

Originally Posted by Big Mac 

Why are UK banks ranked below US banks?

They're in the same ballpark.

I wouldn't necessarily care if a country were 4th vs. 3rd, but I would care if a country were 40th vs. 3rd.

P.S. I'm sure the savings and loans debacle didn't help the US's reputation. The UK's system has been suffering of late too.

[TheMosco]

Originally Posted by Eug 

The interest rates are supposed to be a little better in the US, but I don't see the service as being any better, at least for standard consumer accounts. Specifically, the local podunk banks in the US seem to have a nasty habit of screwing up foreign exchange transactions. It's happened to a couple of friends of mine. The local US bank forgets to change the transaction's currency when transferring to a foreign account. So, $1000 US gets deposited as $1000 Canadian, and 10% difference in the currency value simply disappears into oblivion. I didn't even know this was possible, but those banks managed to do it nonetheless.

I don't think I've ever seen the reverse happen.

Also, in Canada most of the banks are quite large, and national. What this means is that you can usually find a branch of your bank close by. So, you can usually avoid ATM transaction fees anywhere in the country (depending on what type of account you have).

But anyway, this is not a measure of the convenience of the banks. It's a measure of the safety. And indeed, AFAIK, no bank in any of those top 4 countries has failed.

Those seem like 2 pretty poor examples of bad customer service.

International transactions and ATM fees? Thats all you have?

First, I will address the local bank issue. Local banks are awesome. I just moved in July, out of the reach of my local bank. I miss them so much. Everything was so personal, and guess what? They reversed my ATM fees. Need a certified check? No problem, no fee. Need checks, here are some free checks! Open saturday and sunday? You bet! They were pillars of the community. They actually went out of their way to not charge me fees. For my parents, thats all they need. They want great local service. For me, I live in Boston and I travel all over new England. So I get stuck with Bank of America. The service just doesn't compare.

So when I settle down, I am going to find a local bank. Because Bank of America just doesn't compare to that great local service.

And in response to the international transactions. Your sample size probably isn't the best. I am not saying it doesn't happen, but I sure a lot of local banks handle them fine. But at the same time, How many people that belong to local banks actually need to transfer money overseas? I have never heard anyone talking about doing that.

Its nice to have choices.

[Eug]

So, that's all you have? A few free cheques and reversal of a few fees?

I bank with TD. This is a very large bank which is national, and has a large presence of late in the US as well. This is likely one of the banks that the US Fed is talking to for potential purchases of US banks. It's the same TD that runs TD Banknorth in the US and TD Waterhouse in the UK.

My "local branch" is several thousand km away. I have not lived there in over a decade. I just deal with the branch closest to me, and guess what? No problems. In fact I rarely even go to that bank. I just bank online or over the phone. A couple of times I got charged a fee that was my fault so I asked them nicely, and they reversed the fees. If I need to go to a physical bank, they're open on the weekend and there are branches EVERYWHERE.

Just because your large bank sucks for service doesn't mean large banks have to suck.

Why not have both good service and national support? They two are not mutually exclusive. If they are mutually exclusive where you live, then that's unfortunate for you, but don't assume that's the way the world of banking has to work. I have no idea what TD Banknorth is like in the US, but I can assure you the service of TD in Canada is excellent.

[TheMosco]

Originally Posted by Eug 

So, that's all you have? A few free cheques and reversal of a few fees?

I bank with TD. This is a very large bank which is national, and has a large presence of late in the US as well. This is likely one of the banks that the US Fed is talking to for potential purchases of US banks. It's the same TD that runs TD Banknorth in the US and TD Waterhouse in the UK.

My "local branch" is several thousand km away. I have not lived there in over a decade. I just deal with the branch closest to me, and guess what? No problems. In fact I rarely even go to that bank. I just bank online or over the phone. A couple of times I got charged a fee that was my fault so I asked them nicely, and they reversed the fees. If I need to go to a physical bank, they're open on the weekend and there are branches EVERYWHERE.

Just because your large bank sucks for service doesn't mean large banks have to suck.

Why not have both good service and national support? They two are not mutually exclusive. If they are mutually exclusive where you live, then that's unfortunate for you, but don't assume that's the way the world of banking has to work. I have no idea what TD Banknorth is like in the US, but I can assure you the service of TD in Canada is excellent.

I didn't say BOA sucked for service, I just said it didn't compare to my local bank. Its far more than reversal of fees and free checks, its the mentality that my local bank had regarding everything. It was a valued member of community.

My brother makes a good living in the software industry. He wanted to a buy a house. But he had little credit history and is pretty young. My local bank knows my parents have been doing business there for 20+ years. They give my brother the mortgage at a rate that most banks wouldn't touch. They wouldn't do that for anyone(they aren't reckless), but the people in charge there are so entrenched in the community that they know my family and trust us.

I am not saying national banks all suck, I am just saying that from my experience, local banks can't be beat.

[Eug]

Originally Posted by TheMosco 

I didn't say BOA sucked for service, I just said it didn't compare to my local bank. Its far more than reversal of fees and free checks, its the mentality that my local bank had regarding everything. It was a valued member of community.

My brother makes a good living in the software industry. He wanted to a buy a house. But he had little credit history and is pretty young. My local bank knows my parents have been doing business there for 20+ years. They give my brother the mortgage at a rate that most banks wouldn't touch. They wouldn't do that for anyone(they aren't reckless), but the people in charge there are so entrenched in the community that they know my family and trust us.

I am not saying national banks all suck, I am just saying that from my experience, local banks can't be beat.

And I'm saying that from my experience, local banks as you describe can be beat. For example, I was treated very nicely in terms of loans from my local Royal Bank, partially because my parents had a long history with them. The bank manager knew my father well, but not as a personal friend, just through a business-customer relationship.

Hence, I had accounts there for years, even though I didn't even live in the same city.

ie. A properly managed large bank can have BOTH the local good customer service and be a strong part of the community, and have the support of a large nationalized company.

But then again, it sounds like the attitude towards banking may be different in Canada than in the US. I suspect if the large banks didn't provide this level of service, then there would likely be more demand for "local banks".

[tie]

Originally Posted by Eug 

FDIC is $100000, with a temporary emergency shift to $250000 to weather this crisis.

No such crisis exists in Canada.

If you say so. It is $250K until December 2009. Meanwhile the Canadian dollar has dropped 10% in the last week alone. Is that "safety"? You are exposed to far more currency risk by keeping Canadian dollars.

[Eug]

Originally Posted by tie 

If you say so. It is $250K until December 2009. Meanwhile the Canadian dollar has dropped 10% in the last week alone. Is that "safety"? You are exposed to far more currency risk by keeping Canadian dollars.

Uh, you're grasping at straws now. What else would the CAD govt. insure other than CAD$?

Last year, the US$ dropped precipitously too. Does that mean everyone should have taken all their US deposits out of FDIC guaranteed accounts?

[ShortcutToMoncton]

Originally Posted by TheMosco 

My brother makes a good living in the software industry. He wanted to a buy a house. But he had little credit history and is pretty young. My local bank knows my parents have been doing business there for 20+ years. They give my brother the mortgage at a rate that most banks wouldn't touch. They wouldn't do that for anyone(they aren't reckless), but the people in charge there are so entrenched in the community that they know my family and trust us.

Haha

Was it…

*pinkytomouth*

…sub prime?


(i.e. in my view, "soundest banking system" isn't synonymous with "best for Joe Blow consumer," which seems to be the criticism here. No, you're right, Canadian banks might not give "mortgage rates that other banks wouldn't touch." In fact the only one that did get involved with subprime [CIBC] is the only bank who's had any real financial difficultly AFAIK. But congratulations to those who insist on "getting everything for nothing" – you're the reason for the current meltdown. )

greg

[turtle777]

Switzerland # 16 ?

Oh puleeezzee.

I'm sure this list is sufficiently politically motivated / influenced / tainted.

-t

[Eug]

What's wrong with the Swiss banks? (Asking, not criticizing your post.)

[TheMosco]

Originally Posted by ShortcutToMoncton 

Haha

Was it…

*pinkytomouth*

…sub prime?

Well, I wouldn't say sub prime. The payments are way within his means. Its more that he just didn't have much credit history, but they still gave him a good rate based on family history.

[Eug]

Yeah, that's really a judgement call. I can understand a bank not wanting to deal with something like that, but I can also understand a bank giving him the benefit of the doubt esp. when they know the family's history.

This is not the same thing as sub-prime IMHO. Well, I don't really know how the definition applies in this particular instance, but with the sub-prime mess it was about banks not doing due diligence. Basically, many of the banks were simply throwing money at people and not chequing their backgrounds at all. Stupid.

The interesting thing though would be if the same bank last week would have offered someone that mortgage given the same circumstances. It seems banks had clammed up, and were denying lending even when the risk was reasonable.

[turtle777]

Originally Posted by Eug 

What's wrong with the Swiss banks? (Asking, not criticizing your post.)

Nothing at all, they should be ranked much higher.

The Swiss have *nothing* to gain from manipulation of their financial systems, but all to lose.
Unlike most other countries, their economy would not benefit from monkeying around with money and market policies.

I would like to know what makes Canadian banks SAFER than swiss banks, given that Canada's economy is MUCH MORE intertwined with the US than Switzerland is.

-t

[Eug]

Dunno. All I can say is that although the Canadian economy is tightly intertwined with the US economy, the banking system is very different. Compared to the US, the Canadian banks are extremely conservative, and seem to have a lot more governmental oversight.

BTW, I was reading a few articles a while bank when everyone was buying up American banks. They interviewed some Canadian bank CEOs about why they were not joining the buying frenzy despite having a large amount of cash they could make use of to do so, and instantly gain much more presence in the US.

The response was they'd much rather go slowly and make slow profit instead of go quickly and make much quicker profit, but with more risk in this type of economy. I mean that seems obvious, but nonetheless it seemed to some that they were giving up too big of an opportunity for the sake of having no risk.

One way this manifests itself at the consumer banking level is mortgages for example.

In 2006, interest-only mortgages (which I initially didn't even know existed here) represented only a couple of percent, before the government nixed the idea. That year, they were over 20% of US mortgages. Similarly, sub-prime mortgages were over 20% in the US, and were less than 5% in Canada.

I don't know all the reasons for this, but one major reason is probably because the banks here tend to keep their own mortgages and not sell them off. So, it's in their best interest to do due diligence for mortgage credit investigations, because it's their own balance sheet on the line.

For these reasons, defaults on prime mortgages were about 0.2%, vs. 0.8% in the US. For sub-prime mortgages, defaults were less than 2%, vs. over 8% in the US.

I don't know how all this compares to Switzerland, since I have no Swiss accounts.

[Doofy]

I likes my bankers to be eating fondue for their suppers.

[turtle777]

Originally Posted by Eug 

I don't know how all this compares to Switzerland, since I have no Swiss accounts.

Me still has one, from my one year stint over there.

I'm getting ready to transfer some of my money over there.

a) the Swiss Frank is going to be more stable than the $ or EUR
b) the Swiss government will not monkey with their currency to jump-start their economy. Heck, their economy *IS* their money, so leaving it stable as is is the best thing they can do.

-t

[Eug]

Speaking of Switzerland... Just saw on the business news: Q3 saw $49 billion withdrawn from UBS alone. Apparently the financial industry is there is quite concerned. The government is supposedly changing the rules now to shore things up, although I don't know the details.

There was also a blurb on Canadian banks. One university prof says they're safer for just the reasons I cited: Conservative risk-averse management, and more stringent government oversight.

[Doofy]

Originally Posted by Eug 

Speaking of Switzerland... Just saw on the business news: Q3 saw $49 billion withdrawn from UBS alone. Apparently the financial industry is there is quite concerned.

I believe that this is probably more to do with the US IRS than the credit crunch. UBS is a bit of a pariah at the moment.

http://baumanblog.sovereignsociety.c...bs-have-t.html

[Wiskedjak]

Originally Posted by turtle777 

Nothing at all, they should be ranked much higher.

The Swiss have *nothing* to gain from manipulation of their financial systems, but all to lose.
Unlike most other countries, their economy would not benefit from monkeying around with money and market policies.

I would like to know what makes Canadian banks SAFER than swiss banks, given that Canada's economy is MUCH MORE intertwined with the US than Switzerland is.

-t

What scares me is that, while our banking system may be safer than the US, it may not matter because our economy is so intertwined with the American economy. It doesn't matter how safe our banks are, if our major businesses are going out of business because their American customers are no longer buying their stuff.

[Eug]

The Wall Street Journal states today that the Swiss govt is implementing a $60 billion rescue plan for UBS.

Credit Suisse needs $9 billion but is raising it privately.

Originally Posted by Wiskedjak 

What scares me is that, while our banking system may be safer than the US, it may not matter because our economy is so intertwined with the American economy. It doesn't matter how safe our banks are, if our major businesses are going out of business because their American customers are no longer buying their stuff.

That's bad of course but that's a separate issue.

[turtle777]

Originally Posted by Eug 

The Wall Street Journal states today that the Swiss govt is implementing a $60 billion rescue plan for UBS.

Rescue plans is not what I'm worried about.

What I'm worried about is that the Fed and other Central Banks might just take a shortcut at some point and massively devalue their currency, in order to get rid of debt.

Such a game is less likely to be played by the Swiss. And MUCH more likely to be played by Canada, if the US Fed uses enough pressure.

-t

[Eug]

Originally Posted by turtle777 

Rescue plans is not what I'm worried about.

What I'm worried about is that the Fed and other Central Banks might just take a shortcut at some point and massively devalue their currency, in order to get rid of debt.

Such a game is less likely to be played by the Swiss. And MUCH more likely to be played by Canada, if the US Fed uses enough pressure.

-t

That doesn't really make sense. While nobody wants to do it I don't see the Swiss being at less risk for that.