Canadians are in a love-hate relationship with Bay Street’s big financial institutions. Here, the market for financial services is primarily controlled by an oligopoly of ten large financial institutions.
On the one hand, Canadians take pride in their financial system, which has proven to be rock-solid. Since the turn of the millennium, major institutions from the US, the UK, and even Switzerland have either failed or required rescue. Meanwhile, large Canadian institutions have remained mainly unscathed through the first quarter of the century. The way they are regulated and the moderate level of competition they face may explain why they are so resilient. We particularly like our banks because they are familiar, with branches across the country and a heavy presence in the media.
On the other hand, these large institutions owe their resilience, in part, to their high profitability. In 2024, the oligopoly netted earnings of over $59 billion. While these institutions have significant operations in foreign countries, we Canadians are paying for the lion’s share of these profits. Most of us are happy to benefit from a stable financial system, but overpaying for financial services is not a recipe for individual financial success. To reap more benefits from your portfolio, you need to face a few hard truths that Bay Street would prefer you ignore.
