A finance professor at the University of Toronto says American banks do operate in Canada despite assertions by U.S. President Donald Trump that they are not allowed to do business in the country.
Trump says on his social media platform, Truth Social, that "Canada doesn’t even allow U.S. banks to open or do business there," but Laurence Booth at the Rotman School of Management says the president is mistaken.
Booth says Canada's federal Bank Act has for years regulated how Canadian and foreign banks are able to operate.
The legislation divides banks in Canada into Schedule I, II or III, with Schedule I consisting of Canadian banks that are legally able to accept deposits.
Fifteen foreign banks, including three with U.S. parent institutions, are Schedule II banks that are subsidiaries of foreign banks that can do business in Canada and accept deposits.
Booth says dozens of other foreign banks are listed under Schedule III, meaning they are mostly used for wealth management and corporate services, and direct business to their parent corporation rather than being a subsidiary.
"So there's actually nothing to stop an American bank operating in Canada as a separate subsidiary under Schedule II of the Bank Act," he said.
"And in fact, at one point, the central bank and the Department of Finance particularly were actively encouraging U.S. banks to come into Canada to inject more competition into the Canadian banking market."
The Office of the Superintendent of Financial Institutions lists Amex Bank of Canada, Citibank Canada and J.P. Morgan Bank Canada on Schedule II, all having U.S. parent companies.
