What Happens in a Failure

Large Banks (D-SIBs)

A domestic systemically important bank (D-SIB) is a bank that could disrupt the domestic economy should it fail.  Canada currently has six D-SIBs. The Royal Bank of Canada (RBC) and the Toronto-Dominion Bank (TD) have also been designated as G-SIBs.

D-SIBs are so important to the functioning of the financial system and the economy that they cannot be wound up under a conventional bankruptcy and liquidation process should they fail.  The failure of any one of Canada’s D-SIBs, with the potential loss of financial services, even for a short period of time, could have a serious impact on Canada’s economy.

CDIC’s resolution tools ensure the D-SIB would remain open and continue to provide regular banking services for its customers while it is being resolved. Financial products such as loans, mortgages and lines of credit would remain unchanged and chequing and savings accounts would be accessible and continue to receive CDIC’s protection. Customers would be able to access online and phone services and ATMs with no interruption.

Following the 2008 global financial crisis, the Financial Stability Board (FSB) set out the responsibilities and powers that countries should have in place to resolve these large complex banks. Known as the Key Attributes of Effective Resolution Regimes for Financial Institutions, these were endorsed by Canada with other G-20 countries.

Canada’s approach to resolution is aligned with the FSB Key Attributes.

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