Stability of Manitoba credit unions?

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Hopetoretire
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Stability of Manitoba credit unions?

Post by Hopetoretire » 08 Mar 2017 10:17

How does one determine if any of these are likely to "go under"? It's easy to watch stock price of banks, but e.g. how do I choose between Outlook Financial (cashable 5-year GIC at 2.35%) and Achieva (non-cashable at 2.35%)? And what would you say is a "safe" limit to have in a non-reg account? I know it's not 100k as it's not CDIC coverage.

Sigh, one gets so desperate and I'm wondering if I should go above the limit at Myctfs as Peoplestrust is only 2.1% and best at RBCDI is 2.01%! Don't want to open at new banks/CU's as ladder is becoming a pain to maintain.

I'm in ON.

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Re: Stability of Manitoba credit unions?

Post by Thegipper » 08 Mar 2017 10:49

Chasing yields when rates are this low doesn't make that much sense. The first thing on your checklist is whether the GIC has full Canada Deposit insurance protection. Credit unions don't get a checkmark on this. The province of MB has a massive public debt and a less then promising outlook.

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Re: Stability of Manitoba credit unions?

Post by NormR » 08 Mar 2017 11:14

I trust them about as much as I trust Icelandic banks except the MB outfits can't print their own money. They should be fine in a modest downturn but all hell might break loose in a big crash. Too risky for me, but other people seem to enjoy picking up nickles in front of steamrollers.

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Re: Stability of Manitoba credit unions?

Post by Hopetoretire » 08 Mar 2017 11:36

Thank you - might withdraw from the MB CU's as GIC's mature then. Looking at strips for higher yields and see RBCDI has BAM offering 3+ for 2024 maturity. Good buy or not? First time I'm venturing into strips, believe tax calcs for non-reg are "quite complex". Want to stay in fixed income ... any suggestions (other than buying Mountainhouse 25 year shelf life food offering a higher return)?

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Re: Stability of Manitoba credit unions?

Post by ig17 » 08 Mar 2017 12:00

NormR wrote:I trust them about as much as I trust Icelandic banks except the MB outfits can't print their own money. They should be fine in a modest downturn but all hell might break loose in a big crash. Too risky for me, but other people seem to enjoy picking up nickles in front of steamrollers.
+1

The MB credit union deposit insurance is a joke. An insurance that is not backed up by the power of the federal printing press is worthless.

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Ken
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Re: Stability of Manitoba credit unions?

Post by Ken » 08 Mar 2017 12:32

I use Achieva to store short-term cash. If I wanted similar but with CDIC backing what would you suggest? Tangerine?
Here is a link to a list of CDIC members:
http://www.cdic.ca/en/about-di/what-we- ... mbers.aspx
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Re: Stability of Manitoba credit unions?

Post by AltaRed » 08 Mar 2017 12:43

Alterna Bank is currently 1.95%, EQ Bank is currently 2.0%, Bridgewater Bank is 1.75%, Zag Bank is 1.65%
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Re: Stability of Manitoba credit unions?

Post by Okanagan » 08 Mar 2017 12:52

How does one determine if any of these are likely to "go under"? It's easy to watch stock price of banks, but e.g. how do I choose between Outlook Financial (cashable 5-year GIC at 2.35%) and Achieva (non-cashable at 2.35%)? And what would you say is a "safe" limit to have in a non-reg account? I know it's not 100k as it's not CDIC coverage.

Sigh, one gets so desperate and I'm wondering if I should go above the limit at Myctfs as Peoplestrust is only 2.1% and best at RBCDI is 2.01%! Don't want to open at new banks/CU's as ladder is becoming a pain to maintain.

I'm in ON.
While probably mentioned elsewhere...Cdn Tire has a 5 year GIC at 2.5 % ....CDIC insured

Hopetoretire
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Re: Stability of Manitoba credit unions?

Post by Hopetoretire » 08 Mar 2017 13:09

I know, thanks. Sitting on CDIC limit at Myctfs. Oh well back to PT I guess ...

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Re: Stability of Manitoba credit unions?

Post by Ken » 08 Mar 2017 13:27

AltaRed wrote:Alterna Bank is currently 1.95%, EQ Bank is currently 2.0%, Bridgewater Bank is 1.75%, Zag Bank is 1.65%
Thanks AltaRed. I am mostly or only interested in the daily interest savings.
My comparibles are Achieva (not CDIC insured) 1.7% and Tangerine (CDIC insured) 0.8%

Alterna; actually C$ Alterna or CS Alterna is a bit unclear.
They have 2 accounts: "High Interest eSavings Account" with a rate on All Balances of 1.95% but it says "Interest is calculated daily on the closing balance and paid monthly" which sounds simple enough but why then do they also have a "Daily Interest Savings Account" with MUCH lower rates?

EQ: actually Equitable Bank is 0.90% Marginally better than Tangerine but not worth moving if you already have a Tangerine acct.
They don't appear to have their GIC rates online so I'll take your word on the 2.0%

Bridgewater: After digging way down in their website I finally found the rate as you said 1.75%
This is a possible contender. I will look into this one. Starting with a search of this forum.

Zag: Yup... straight up on their homepage. 1.65%
At least I've HEARD of this one before. I'll definitely look into this one.

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Re: Stability of Manitoba credit unions?

Post by adrian2 » 08 Mar 2017 13:34

Ken wrote:I am mostly or only interested in the daily interest savings.
My comparibles are Achieva (not CDIC insured) 1.7% and Tangerine (CDIC insured) 0.8%
As discussed at length in other threads, circa 10 minutes on the phone every 3 or 4 months can bump the Tangerine rate anywhere from 2% (current rate I'm enjoying) to 3% (past rate in Q4 2016).
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Re: Stability of Manitoba credit unions?

Post by BRIAN5000 » 08 Mar 2017 13:42


While probably mentioned elsewhere...Cdn Tire has a 5 year GIC at 2.5 % ....CDIC insured
and Oaken 1.5% Calculated daily and paid monthly or 1.65% cashable after 90 days TWO CDIC insurers so $200,000.

Anyone had any negotiations with BNS for GIC's lately?
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little bit longer and wish you would’ve sold early - this is just part of the game.” - Frank Zorilla via Abnormal Returns

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Re: Stability of Manitoba credit unions?

Post by Ken » 08 Mar 2017 13:44

adrian2 wrote:As discussed at length in other threads, circa 10 minutes on the phone every 3 or 4 months can bump the Tangerine rate anywhere from 2% (current rate I'm enjoying) to 3% (past rate in Q4 2016).
Thanks Adrian. I can't be bothered fighting them for the amounts I keep there. Other things being equal I'll take the guys with best posted rate.
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Re: Stability of Manitoba credit unions?

Post by DenisD » 08 Mar 2017 13:59

Ken wrote:EQ: actually Equitable Bank is 0.90%
http://www.EQBank.ca is 2%.

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Re: Stability of Manitoba credit unions?

Post by Ken » 08 Mar 2017 14:19

DenisD wrote:
Ken wrote:EQ: actually Equitable Bank is 0.90%
http://www.EQBank.ca is 2%.
OK, that's confusing.
EQBank.ca calls themselves Equitable Bank and links to Equitable Bank on CDIC
equitablebank.ca also calls themselves Equitable Bank and links to Equitable Bank on CDIC
So I assume that EQBank.ca has no branches. Neither does equitablebank.ca.
I finally found a link "EQ Bank is brought to you by Equitable Bank" indicating that one is owned by the other.
Thanks for the clarification Denis.
And yes, EQbank.ca is showing 2%. Cool.
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Re: Stability of Manitoba credit unions?

Post by AltaRed » 08 Mar 2017 14:24

I was focusing my response to you on HISA accounts, not GICs.
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Re: Stability of Manitoba credit unions?

Post by twa2w » 08 Mar 2017 21:44

ig17 wrote:
NormR wrote:I trust them about as much as I trust Icelandic banks except the MB outfits can't print their own money. They should be fine in a modest downturn but all hell might break loose in a big crash. Too risky for me, but other people seem to enjoy picking up nickles in front of steamrollers.
+1

The MB credit union deposit insurance is a joke. An insurance that is not backed up by the power of the federal printing press is worthless.
You may be surprized to learn CDIC is not backed by the federal printing presses.
CDIC is a crown Corp. It is not guaranteed by the federal government.
Failure of a financial institution are covered by premiums paid by member institutions in CDIC.
Is it possible the federal government would step in if a large number of institutions failed and CDIC didn't have the funds? Yes likely but there is no guarantee.
Of course in Manitoba it is a similiar situation unlike some other provinces that support the guarantee.
Both credit unions and banks are regulated by their respective governments to maintain capital ratios, liquidity etc.
I don't think you have much to worry about in either case.

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Re: Stability of Manitoba credit unions?

Post by ig17 » 08 Mar 2017 23:36

twa2w wrote:You may be surprized to learn CDIC is not backed by the federal printing presses.
CDIC is a crown Corp. It is not guaranteed by the federal government.
Failure of a financial institution are covered by premiums paid by member institutions in CDIC.
Is it possible the federal government would step in if a large number of institutions failed and CDIC didn't have the funds? Yes likely but there is no guarantee.
I will take my chances with CDIC. :)

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Re: Stability of Manitoba credit unions?

Post by AltaRed » 08 Mar 2017 23:40

I agree there is likely very little risk with the MB credit unions.....except when/if everything goes south in a hurry and the provincial gov't has bigger things to worry about than out-of-province depositors. I'd rather count on the Feds keeping the banking system functioning than being cut loose from the dock in a hurricane.
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Re: Stability of Manitoba credit unions?

Post by NormR » 08 Mar 2017 23:56

twa2w wrote:You may be surprized to learn CDIC is not backed by the federal printing presses.
CDIC is a crown Corp. It is not guaranteed by the federal government.
Failure of a financial institution are covered by premiums paid by member institutions in CDIC.
Is it possible the federal government would step in if a large number of institutions failed and CDIC didn't have the funds? Yes likely but there is no guarantee.
The CDIC can currently draw on $20 billion from the Feds, which can be increased at any time. IIRC, they can also borrow from the BoC.

Of course, theoretically, a government could default on any promise that has been made, send any depositors who complain to gulags, etc.

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Re: Stability of Manitoba credit unions?

Post by twa2w » 09 Mar 2017 18:11

NormR wrote:
twa2w wrote:You may be surprized to learn CDIC is not backed by the federal printing presses.
CDIC is a crown Corp. It is not guaranteed by the federal government.
Failure of a financial institution are covered by premiums paid by member institutions in CDIC.
Is it possible the federal government would step in if a large number of institutions failed and CDIC didn't have the funds? Yes likely but there is no guarantee.
The CDIC can currently draw on $20 billion from the Feds, which can be increased at any time. IIRC, they can also borrow from the BoC.

Of course, theoretically, a government could default on any promise that has been made, send any depositors who complain to gulags, etc.
The 20 billion is basically a standby loan. It is not a guarantee. It could be increased at any time but also decreased or cancelled.
If the s hits the fan, and that credit is extended, CDIC is required to pay it back. this will mean increased premiums from the CDIC members and lower rates or profits.

I agree tho that not a lot of risk, I don't think the gov would ever allow CDIC to fail at this time.
I would prefer to see risk based premiums as well as a coverage system that placed some risk on the borrower ie CDIC insures the 1St 10,000, then 80% of the next 100,000 say.
Of course it will likely be a black swan event to trigger changes like that.

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Re: Stability of Manitoba credit unions?

Post by SoninlawofGus » 09 Mar 2017 21:44

twa2w wrote:
NormR wrote:
twa2w wrote:You may be surprized to learn CDIC is not backed by the federal printing presses.
CDIC is a crown Corp. It is not guaranteed by the federal government.
Failure of a financial institution are covered by premiums paid by member institutions in CDIC.
Is it possible the federal government would step in if a large number of institutions failed and CDIC didn't have the funds? Yes likely but there is no guarantee.
The CDIC can currently draw on $20 billion from the Feds, which can be increased at any time. IIRC, they can also borrow from the BoC.

Of course, theoretically, a government could default on any promise that has been made, send any depositors who complain to gulags, etc.
The 20 billion is basically a standby loan. It is not a guarantee. It could be increased at any time but also decreased or cancelled.
If the s hits the fan, and that credit is extended, CDIC is required to pay it back. this will mean increased premiums from the CDIC members and lower rates or profits.

I agree tho that not a lot of risk, I don't think the gov would ever allow CDIC to fail at this time.
I would prefer to see risk based premiums as well as a coverage system that placed some risk on the borrower ie CDIC insures the 1St 10,000, then 80% of the next 100,000 say.
Of course it will likely be a black swan event to trigger changes like that.
This was dealt with long ago:
viewtopic.php?f=35&t=110143&hilit=cdic&start=75

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Re: Stability of Manitoba credit unions?

Post by twa2w » 10 Mar 2017 00:40

SoninlawofGus wrote:
twa2w wrote:
NormR wrote:
The CDIC can currently draw on $20 billion from the Feds, which can be increased at any time. IIRC, they can also borrow from the BoC.

Of course, theoretically, a government could default on any promise that has been made, send any depositors who complain to gulags, etc.
The 20 billion is basically a standby loan. It is not a guarantee. It could be increased at any time but also decreased or cancelled.
If the s hits the fan, and that credit is extended, CDIC is required to pay it back. this will mean increased premiums from the CDIC members and lower rates or profits.

I agree tho that not a lot of risk, I don't think the gov would ever allow CDIC to fail at this time.
I would prefer to see risk based premiums as well as a coverage system that placed some risk on the borrower ie CDIC insures the 1St 10,000, then 80% of the next 100,000 say.
Of course it will likely be a black swan event to trigger changes like that.
This was dealt with long ago:
viewtopic.php?f=35&t=110143&hilit=cdic&start=75
Interesting thread. It also contains misconceptions about CDIC. However, dont want to start nitpicking as the bottom line remains the same. CDIC virtually no risk. Not likely to change the way it insures deposits.

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Re: Stability of Manitoba credit unions?

Post by Chuck » 10 Mar 2017 14:28

To muddy the waters further, Manitoba credit union deposits are insured by the Deposit Guarantee Corporation of Manitoba. They have a website but it's unclear to me how much is covered or how deep their pockets are.

Out of curiosity, I tried to look up the last time a Manitoba Credit Union failed, since I live in Manitoba and can't ever recall hearing about one. Alas, my google-foo proved insufficient, or it's never happened. I can't find a reference to a failure in any event.

I can also tell you Manitoba credit unions have been amalgamating like crazy over the last decade. I'm not sure if bigger is better, but the trend has been to fewer and bigger as far as the number of credit unions go.

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Re: Stability of Manitoba credit unions?

Post by ockham » 10 Mar 2017 19:16

Chuck wrote:To muddy the waters further, Manitoba credit union deposits are insured by the Deposit Guarantee Corporation of Manitoba. They have a website but it's unclear to me how much is covered or how deep their pockets are.

Out of curiosity, I tried to look up the last time a Manitoba Credit Union failed, since I live in Manitoba and can't ever recall hearing about one. Alas, my google-foo proved insufficient, or it's never happened. I can't find a reference to a failure in any event.

I can also tell you Manitoba credit unions have been amalgamating like crazy over the last decade. I'm not sure if bigger is better, but the trend has been to fewer and bigger as far as the number of credit unions go.
The Manitoba Deposit Guarantee Corp guarantees deposits without upper limit. The guarantee does not have formal government backing. The Corp has assets of its own approximating 1% of total system deposits. Its assets and its operations are funded by premiums paid by credit unions. Credit unions are required to report regularly to the Corp under a variety of metrics, e.g., loan delinquency status, loan diversification, etc.

There have been a couple of Manitoba Credit Union failures, though because no depositor has ever lost any funds as a result, they perhaps should not be described as such. The failures were all successfully managed by means of other credit unions absorbing the assets and deposits of the weak sibling.

Manitoba is down to just over 30 Credit Unions. The largest 5 or 6 have probably 60%-70% of the total system assets. One does wonder how much lower the number of credit unions can shrink and the current deposit insurance model continue to make sense. Manitoba used to have a Francophone caisse populaire system with its own deposit insurer. About a decade ago all the caisse populaires amalgamated to form one Caisse, the St. Boniface Caisse. That there was a deposit insurer having just one client obviously made no sense, and so the Caisse insurer was rolled into the Deposit Guarantee Corp.

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