Canadian Financial, Real Estate and Mortgage Glossary

Bank

Definition of bank

Banks are financial institutions that serve depositors, lenders, borrowers and investors. Banks invest the money that customers deposit, pay out money when it's required by customers and lend money to borrowers. The economic services that a bank offers are large and varied, with the most popular options being checking and savings accounts. These programs allow customers to deposit funds into designated accounts, remaining safe for future use, as well as earning interest in certain accounts. Banks also offer credit cards and special accounts for businesses. Banks also offer loans for large purchases, such as auto loans for vehicles and mortgages for homes.

The five largest banks in Canada, commonly referred to as the Big Five, include: Royal Bank of Canada, Toronto-Dominion Bank, Bank of Nova Scotia, Bank of Montreal and Canadian Imperial Bank of Commerce. Although not as large as the Big Five, the following banks also comprise a significant amount of financial operations in Canada: National Bank of Canada, HSBC Bank Canada, Laurentian Bank of Canada, Churchill Investments Group and Canadian Western Bank.

Unlike banks, which are for-profit, credit unions are not-for-profit, member-owned financial institutions. Credit unions often offer lower rates and less fees than banks, but are also much smaller, with fewer locations.

Related Terms and Acronyms:

• Canadian Bankers Association (CBA)   Professional industry association that provides information, research, advocacy, education and operational support services primarily to the banking industry.
    ➥  One of Canada's oldest business associations.
• interest factor   The decimal equivalent for an interest rate on a unit amount for a period of time. Computed by interest rate divided by number of days in a basic year times the number of days accrued.
• interest rate (IR)   The rate a lender charges an individual to borrow money.
• investment banking (IBK)   Bank operations that manage a bank's funding position, as well as its holdings of Treasury bills, bonds and preferred and common stock.
• lead lender   A financial institution which heads up a financial consortium or syndicate to provide funds for a mortgage.
• mortgage banker   An employee of a large bank who finds financing for the general public.
• Mortgage Broker (MB)   One who finds clients perspective lenders at generally no cost. Mortgage Brokers have a special relationship with lenders and can offer their clients the best rates and service. CanEquity goes through great lengths to ensure you are serviced by the best Mortgage Brokers in Canada.
• mortgagee   The lender in a mortgage transaction.
• posted rate   The mortgage rates initially offered by a bank which a borrower is then expected to negotiate down.
• prime lending rate (PLR)   The rate of interest charged on loans by chartered banks to their most creditworthy customers.
    ➥  Bank of Canada's prime (best) lending rate.

More Related Terms and Acronyms

• bank spread — Definition
• combination account — Definition
• credit union (CU) — Acronym
• four pillars — Definition
• lender — Definition
• niche banks — Definition
• prime rate — Definition
• promissory note (PN) — Acronym
• provision for credit losses (PCL) — Canada, Acronym
• regional bank — Definition
• retail banking — Definition
• schedule i banks — Definition
• schedule ii banks — Definition
• schedule iii banks — Definition
• specialized financing corporation — Definition
• spread — Definition
• standby commitment — Definition
• statement — Definition
• third-party originator — Definition
• usurious rate — Definition