Schedule II Bank

What Is a Schedule II Bank?

A Schedule II bank is a subsidiary of a foreign bank that is permitted to carry on with work in Canada. Commonly, the names of these banks mirror their foreign subsidiary nature, for example, Citibank Canada and the Amex Bank of Canada.

A Schedule I bank is a domestic institution, for example, the Royal Bank of Canada or Toronto-Dominion Bank. There additionally are Schedule III banks, which are parts of foreign institutions that carry on with work in Canada under a similar name.

This system of government order of banks was authoritatively discontinued in 2001. Strangely, be that as it may, the terms remain widely being used.

Figuring out the Schedule II Bank

Schedule II banks are the most common type of bank in Canada, as large numbers of the more modest credit unions, trusts, and banks fit into this category. Like all financial institutions operating in Canada, they are regulated by the federal Bank Act.

Under Canada's Bill C-8, executed on Oct. 24, 2001, the Schedule I and II bank categories were supplanted with another system in light of the institution's size. Under this legislation, institutions with more than $5 billion in equity are prohibited from permitting one individual to claim over 20% of the voting shares or 30% of the non-voting shares.

Institutions with values of $1 billion to $5 billion don't have this restriction yet are required to have public ownership of something like 35% of voting shares. Institutions with under $1 billion in equity have no ownership restrictions.

Albeit the Schedule I and II bank assignments have accordingly been supplanted, these terms are still widely used to portray the two principal types of banks in Canada.

Canada's Big Six are the National Bank of Canada, the Royal Bank of Canada, the Bank of Montreal, the Canadian Imperial Bank of Commerce, the Bank of Nova Scotia, and the Toronto-Dominion Bank.

About Canada's Banking System

Canada's federal government has sole jurisdiction over banks, while credit unions, securities dealers, and mutual funds are fundamentally regulated by provincial governments. Canada's Bank Act frames Schedules I, II, and III, which list all banks permitted to operate in Canada.

Since Schedule I banks are true domestic banks and not auxiliaries of a foreign bank, they are the main businesses that are permitted to receive, hold, and uphold security interest as depicted in the Bank Act. Schedule II banks are auxiliaries of a foreign bank that are permitted to acknowledge deposits, and Schedule III banks are foreign banks permitted to conduct business in Canada.

The Big Six Banks

The Schedule I banks are overwhelmed by the Big Six Banks, the term commonly used to portray the National Bank of Canada, Royal Bank of Canada, Bank of Montreal, Canadian Imperial Bank of Commerce, Bank of Nova Scotia (Scotiabank), and Toronto-Dominion Bank (TD).

The Office of the Superintendent of Financial Institutions (OSFI) is the regulator of Canadian banks. Financial gatherings are likewise represented by other regulatory bodies including securities regulators and insurance regulators.

Features

• A Schedule II bank is a domestic business. This category incorporates the Big Six that overwhelm Canadian banking.
• The government no longer purposes these categories except for the terminology is still in common use.
• A Schedule II bank is a foreign bank's subsidiary that carries on with work in Canada, like Citibank Canada.