Crisis hits Canadian banks’ deposits in U.S. with TD faring the worst, filings show

Canadian banks with operations south of the border are showing some scars from the United States banking crisis, with deposits coming under pressure in the first quarter according to filings with the U.S. Federal Reserve.

On average, deposits at the four Canadian banks with significant U.S. divisions slipped by three per cent quarter over quarter, according to a May 1 note from National Bank of Canada analyst Gabriel Dechaine. The calculations were based on quarterly filings known as call reports made to the Federal Financial Institutions Examination Council. Dechaine said the dip was consistent with what U.S. banks have experienced and that steepest declines were recorded in non-interest-bearing deposits.

Toronto-Dominion Bank was hit the hardest with a quarter-over-quarter drop in deposits at five per cent, driven by an 18 per cent decline in sweep deposits, or accounts that move excess funds between a chequing account to a higher interest-earning account, since last quarter. Dechaine said the deposit sweeps were related to TD’s 12 per cent stake in Charles Schwab Corp., which gave the Big Six bank more exposure to the U.S. sector’s woes. TD’s total deposits were also down 12 per cent from this time last year.