Canada's deposit insurer reviewing insurance deposit limits -trade group

·1 min read

By Divya Rajagopal

TORONTO, March 21 (Reuters) - Canada's bank deposit insurer is reviewing deposit insurance limits to safeguard the country's financial system, the head of the Bank and Trust Companies Association said on Tuesday, after the trade group called for better coverage.

The group, representing the country's medium and small banks, wrote to Finance Minister Chrystia Freeland last month urging the Canada Deposit Insurance Corporation (CDIC) double its coverage to C$200,000 ($145,847) per depositor.

Canada has the lowest level of deposit insurance among G7 countries, the letter dated Feb. 7 said.

"The CDIC is reviewing their depositor insurance regime to make sure that it is effective," said Andrew Moor, chair of the group, in an interview. "They are always trying to make sure that things are relevant."

CDIC was unavailable for comment.

In an email, a spokesperson for Freeland said the government was committed to a "strong deposit insurance framework."

The recent collapse of regional U.S. lenders such as Silicon Valley Bank and Signature Bank has raised questions about the stability of financial institutions across the world.

Despite Canada's lower deposit insurance cap, analysts have said that the U.S. banking crisis is unlikely to spread to the northern neighbor where banks are better regulated and have ample liquidity.

"Increased protection limits would send Canadians a strong signal about the stability of the financial system while greatly reducing any concern about the damage a 'run on the bank' could have on an institution and its depositors," the group said in the letter.

($1 = 1.3713 Canadian dollars) (Reporting by Divya Rajagopal in Toronto and Steve Scherer in Ottawa; Editing by Richard Chang)