Asked about the trade war with Canada on Wednesday, President Donald Trump falsely claimed that U.S. banks are not allowed to do business with its neighbor to the north.
There are more than 3,700 domestically owned commercial banks in the U.S., according to the Federal Reserve , compared to the 15 with a presence in Canada. TRUMP: “They have their banks here, Bank of Canada, all of their big banks — big, beautiful banks. I think they have six or seven major banks here. We don’t have our banks there. You know why? They don’t allow it. Such restrictions may be the reason the majority of U.S.-owned banks choose not to do business over the border.
THE FACTS: There are currently 15 U.S.-based banks operating out of Canada, either as branches or subsidiaries, according to a spokesperson for the Canadian Bankers Association. Nathalie Bergeron, a spokesperson for the Canadian Bankers Association, said that U.S.-based bank branches and subsidiaries operating in Canada have combined assets of approximately $124 billion in Canadian dollars — more than half of all assets held by foreign bank subsidiaries and branches.
There are eight Canadian banks operating in the U.S., according to the Federal Reserve’s most recent data . “These banks specialize in a range of financial services, including corporate and commercial lending, treasury services, credit card products, investment banking and mortgage financing,” she said. Certain restrictions can make it difficult for U.S. banks to compete north of the border, experts say, but they are free to enter the market. The Bank of Canada is not one of them — it is Canada’s central bank, equivalent to the Federal Reserve in the U.S., not a commercial enterprise. “They serve not only customers with cross-border business activities, but also Canada’s domestic retail market. Among the U.S. banks doing business in Canada are J.P. Morgan Chase Bank, Citibank, Bank of America, Capital One, and Wells Fargo.
Both Schedule II and Schedule III banks face restrictions due to Canadian banking regulations. Howe Institute think tank, explained that Schedule III banks cannot accept deposits below $150,000 . This means most people won’t be able to use them as their retail bank.
Jeremy Kronick, a financial and monetary policy expert who is president and CEO of the Canadian C.D. He added that since Schedule II banks are separate legal entities from their foreign parent company, they need their own local capital and liquidity structures — an inefficient option from the bank’s perspective.
