Hacker News Reader

Comment by TMWNN | Hacker News Reader

>Banks similar to Silicon Valley Bank are essential because they undercut BoA, and prevent the "Canada" situation.

>Unfortunately, SVB blew its top off. But the system itself is good.

Yes. Canadians who brag about how none of their banks had to be bailed out in the 2008 crisis are a) wrong (they received tens of billions from Ottawa, and US TARP money), and b) don't realize that the Big Five Canadian banks have far, far, far more market share than the US's Big Four. As you said, there is no equivalent of a Silicon Valley Bank in Canada. There are no regional banks whatsoever; no smaller player that may be more friendly to startups, or otherwise more flexible, than the Big Five.

View on HN

Canada is 1/10th the population of the US. We don't need regional banks. There are also plenty of credit unions for those of us that don't want to bank with the big banks which are just as capable as many of the larger banks.

Credit unions are by design not meant to serve business customers (some do, but they're the exception for a reason). Further, Canadian credit unions (with the kinda sorta exception of Desjardins) are insignificant in size, which is why I didn't bother mentioning them in the first place.

Let me repeat: Canada lacks the equivalent of regional banks, and that's a problem for entrepreneurs looking for banking (let alone loans) for new ventures.

Yeah, CDN banks got massive direct and indirect money from Ottawa: https://www.cbc.ca/news/business/banks-got-114b-from-governm...

Canada also had its own duration mis-match crisis with Asset-Backed Commercial Paper where debtors expected to just roll over the paper every 30-45 days... until they couldn't and it froze up. Took a decade to unwind.

https://www.advisor.ca/news/industry-news/lesson-to-learn-fr...

> There are no regional banks whatsoever

Sure there are. Laurentian Bank is almost entirely based in Quebec. National Bank of Canada has almost all of its branches in Ontario, Quebec and NB.

Then there are the credit unions which are almost entirely provincial (with a riskier backstop than that of US credit unions).

In fact, in many cases, deposits in provincial Credit Unions in Canada (e.g. Alberta and BC) are 100% guaranteed. (As opposed to the big banks, which are only guaranteed to $100,000). Some provinces hve other rules, but in general, deposits to Canadian Credit Unions have better deposit insurance protection than the big Canadian Banks.

Source: https://www.canada.ca/en/financial-consumer-agency/services/... (and the marketing campaigns of the credit unions)

Diff is that the feds have the ability to literally print money. Provinces would be limited to issuing bonds.

> There are no regional banks whatsoever

That's inaccurate. They don't the market share small US banks do collectively, and none of them are particularly focussed on tech startup, but they do exist, alongside credit unions - https://en.wikipedia.org/wiki/List_of_banks_and_credit_union....

The ATB seems particularly of note - directly owned and backstopped by the Alberta Provincial government, has ~15% of banking in the province.

Reply on news.ycombinator.com