Canada’s six big banks are about to make nearly $60 billion in profits this year.
Canadian banks are some of the richest companies in the world. They made record-breaking profits in 2021. But does that mean they’re going to drop your bank fees?
Nope. It just means Canadian banks give their CEOs and shareholders a bunch of massive Christmas bonuses. Like, $16 billion in bonuses.
Why do the big six banks have so much money?
Regular business like daily banking, mortgages, and interest from lines of credit make a ton of money. But big mergers and wealth management bring in more.
And Canadian banks don’t pay a lot of tax. They pay the lowest tax of all the G7 wealthy countries. And they avoid a lot of tax by parking money in other countries. That sounds illegal, but it isn’t. It’s just a really crummy thing to do. So instead of paying tax in the country where they make all this money, they hide their money overseas.
Now they have more money than they know what to do with. Canadian banks saved a bunch of money in 2020 just in case the pandemic forced people to go bankrupt. The banks would have to pay for all those bad loans.
But the Canadian Emergency Response Benefit (CERB) meant people could keep making their mortgage payments. It was like a big pipeline of money from the government straight into bankers’ pockets.
So if they have all these billions, why charge bank fees at all?
Because they can.
Duff Conacher is a co-founder of Democracy Watch. He told CBC that banks are jacking up their fees because no one is stopping them.
“Prime Minister Trudeau said a year ago that the banks should be doing more to help Canadians—and gouging them is not helping them.”
Some of the banks helped in the early days of the pandemic. They cut interest rates on loans. And they gave people a break on their mortgage payments if they lost their jobs.
But those breaks are over. And the fees are going up. And Canadians already pay some of the highest bank fees in the world.
Some folks can buy their way out of bank fees. For example, if you keep more than a few thousand dollars in your chequing account, depending on the bank, then you don’t have to pay the monthly fee.
But half of Canadians don’t have that much money. Half of us have less than $200 at the end of the month after paying for food, housing, and bills.
And if you can’t keep a cool $5,000 in your chequing account, then your bank fee is one of those bills.
The First Call Child and Youth Advocacy Society published a report last month. They say 1 in 3 children on northern Vancouver Island lives in poverty.
Adrienne Montani is First Call‘s executive director. She told CTV News that “[m]ost poor children in the province…live with parents that are in the workforce.”
That means many working parents on Vancouver Island have trouble feeding their kids. So how can they keep $5,000 in the bank to avoid the fees?
Meanwhile, the president of RBC made more than $12 million in 2020. That’s enough money to give everyone in Woss a really good wage for a year.
If you’re a regular person, the menu of stuff you get at any of the six big banks looks the same. They offer the same services for the same rates. Maybe one of them will give you an iPad for signing up. Big deal.
But there’s no competition when you can call your banker buddies and decide to charge the same price for the same stuff.
And the banks get away with this because the government won’t do anything about it.