American banks can do business in Canada, but the rules are not the same. While 16 U.S.-based banks hold about C$113 billion in assets north of the border, they must navigate a regulatory environment far more restrictive than what Canadian banks face in the United States.
Operating in Canada means choosing between two structures, each with its own limitations. U.S. banks can set up a subsidiary, which forces them to follow the same strict rules as domestic banks, or they can open a branch, which comes with a major catch—branches cannot accept deposits under C$150,000. This effectively shuts them out of much of the retail banking market, limiting their reach and competitiveness. The message is clear: Canada allows U.S. banks in, but only on its own terms.
Meanwhile, Canadian banks in the U.S. play by different rules. They establish branches and subsidiaries with far fewer roadblocks, allowing them to expand rapidly and capture market share. This asymmetry has not gone unnoticed. The lack of balance raises questions about whether American banks are being held back while Canadian banks thrive freely in the U.S.
The issue has drawn political attention, with former President Donald Trump previously calling out the regulatory gap. While Canada insists its rules are about financial stability, critics argue they create an uneven playing field. If Canadian banks enjoy open access in the U.S., why should American banks face restrictions in Canada?
This long-standing discrepancy in banking regulations remains a sticking point. American lenders are willing to compete, but the rules in Canada force them to play at a disadvantage. As Canadian banks continue to expand southward without similar restrictions, the question remains—when will the U.S. push back?
Sources:
https://www.cbc.ca/news/business/trump-fact-check-us-banks-canada-1.7449233
https://www.barrons.com/articles/canada-trump-banks-51ab099d