An argument over bank access has exposed a growing disconnect between Washington’s political messaging and Canada’s financial regulations. After U.S. President Donald Trump accused Canada of preventing American banks from doing business north of the border, Canada’s top banking regulator offered a different explanation for why recent Canadian bank acquisitions went to domestic buyers.
According to the regulator, foreign banks were welcome to compete for those institutions, but American lenders did not submit bids.
The disagreement comes as Canada and the United States navigate an increasingly contentious trade relationship. It also raises important questions about foreign ownership, banking competition and why major American financial institutions have chosen not to expand more aggressively into Canada’s market.
Canada’s Banking Regulator Pushes Back Against Trump’s Claims
Peter Routledge, superintendent of Canada’s Office of the Superintendent of Financial Institutions (OSFI), challenged the suggestion that American banks face a blanket prohibition on entering the Canadian banking market. Speaking at the Global Risk Institute Summit in Toronto on October 7, 2026, Routledge explained that several mid-sized Canadian banking institutions had attracted buyers in recent years. Those buyers happened to be Canadian, but that outcome was not the result of regulators favouring domestic ownership over foreign investment. American banks, he indicated, had opportunities to participate in those transactions but did not step forward with offers.
Routledge emphasized that OSFI evaluates prospective buyers without automatically favouring Canadian ownership, describing the regulator as “geographically agnostic.” His comments drew an important distinction between financial institutions being legally excluded from a market and businesses deciding that an acquisition does not suit their commercial interests. Foreign ownership does not automatically disqualify a prospective purchaser, although proposed bank acquisitions must still satisfy Canada’s regulatory and approval requirements. That distinction directly challenges Trump’s portrayal of the Canadian market as closed to American banking institutions.
Trump Has Repeatedly Claimed American Banks Are Shut Out
Trump’s criticism of Canada’s banking system is not new. On March 4, 2025, he accused Canada of preventing American banks from operating domestically while allowing Canadian financial institutions to expand throughout the United States. He returned to the allegation on September 2, 2026, during an Oval Office meeting with American travel executives. Responding to a question about possible renewed trade negotiations with Canada, Trump argued that major Canadian banks enjoyed access to the American market while U.S. lenders were denied comparable opportunities north of the border.
The president’s characterization overlooked an important distinction. Canadian regulations can make market entry expensive or commercially unattractive, but they do not categorically prohibit American banks from operating in the country. Trump also referred to the Bank of Canada as though it were a commercial institution expanding into the United States. In reality, the Bank of Canada is the country’s central bank, comparable to the Federal Reserve, rather than a traditional retail lender. The inaccuracies surrounding these claims have become especially significant because Trump has raised banking access while discussing broader Canada-U.S. trade tensions.
Fifteen American Banking Institutions Already Operate in Canada
American banks are not merely eligible to enter Canada; several major institutions already maintain established operations in the country. According to figures provided by the Canadian Bankers Association and reported by the Associated Press in September 2026, there were 15 U.S.-based banking branches and subsidiaries operating in Canada. They collectively held approximately C$124 billion in assets, equivalent to roughly US$90.1 billion at the exchange rate used in that reporting. Those figures offer a direct factual counterpoint to the suggestion that American lenders have no presence north of the border.
The institutions include familiar names such as JPMorgan Chase, Citibank, Bank of America, Capital One and Wells Fargo. Their Canadian businesses provide services ranging from commercial lending and corporate financing to credit cards, investment banking and mortgage-related products. Many focus on businesses and institutional clients rather than maintaining extensive networks of neighbourhood branches. As a result, ordinary Canadians may rarely encounter their names while shopping for a chequing account or mortgage. Nevertheless, their operations demonstrate that American financial institutions already participate in significant parts of Canada’s banking industry.
Why American Banks Face Different Rules in Canada
Canada permits foreign-owned banks to operate through different legal structures, and the choice has important consequences. Schedule II banks are Canadian-incorporated subsidiaries of foreign banking institutions. They can offer ordinary retail banking services and operate under essentially the same banking framework as domestically owned banks. Schedule III institutions, by contrast, are branches of foreign banks that operate in Canada without being separately incorporated Canadian banks. These branches face restrictions on deposit-taking activities, particularly when dealing with everyday retail customers.
For example, full-service foreign bank branches generally cannot accept deposits below C$150,000, subject to limited exceptions. That makes the branch structure poorly suited to attracting consumers who simply want to deposit their paycheques or establish small savings accounts. Foreign-owned subsidiaries can compete more directly for those customers, but maintaining a separate Canadian legal entity also involves dedicated capital, liquidity and regulatory requirements. Consequently, American banks face a commercial decision about how much they want to invest in Canada’s retail market. The regulations create practical differences between banking models, but they do not amount to a prohibition against American ownership or participation.
American Banks Can Buy Canadian Lenders, but Approval Is Not Automatic
Canadian banking laws establish ownership restrictions, but those restrictions are not designed exclusively to keep American investors out. A March 2025 analysis by Canadian law firm Torys LLP explained that U.S. banks have been allowed to establish Canadian subsidiaries since the 1980s. It also noted that Canada exempted American investors from earlier foreign-ownership restrictions through the 1989 Canada-U.S. Free Trade Agreement. Today’s ownership framework generally applies regardless of whether a prospective shareholder is Canadian or foreign. One important limitation concerns banks with more than C$12 billion in shareholders’ equity, which generally must remain widely held rather than being controlled by a single owner.
Acquiring a smaller Canadian lender is a different proposition from purchasing an institution such as RBC or TD. Eligible foreign banks can pursue acquisitions, but significant ownership changes require regulatory approval. The federal finance minister considers matters including competition, financial stability, consumer interests and the prospective buyer’s ability to support the business. OSFI assesses prudential risks, while the Competition Bureau examines potential competitive effects. An American bidder therefore would not be guaranteed approval simply by offering the highest price. However, its nationality would not automatically disqualify it either. These safeguards help explain why Routledge distinguished between legitimate regulatory oversight and claims that American banks are barred from buying Canadian financial institutions.
RBC’s Purchase of HSBC Canada Was a Major Missed Opportunity for Foreign Buyers
One of the most significant recent examples was Royal Bank of Canada’s acquisition of HSBC Bank Canada. HSBC’s parent company announced plans to sell its Canadian operations in November 2022, and RBC completed the transaction on March 28, 2024. The agreement included C$13.5 billion for HSBC Canada’s common shares. At the time of the government’s review, HSBC Canada served approximately 780,000 customers and employed about 4,000 people. Its substantial commercial banking operations, international connections and retail customers made the sale a major event in Canada’s financial sector. According to the Torys analysis, no serious foreign bidders were reportedly involved in the sale process.
The federal government approved RBC’s acquisition in December 2023, subject to conditions intended to protect customers and employees. Those included maintaining services at at least 33 HSBC branches for a specified period, preserving certain international banking services and offering transitional fee protections. The Competition Bureau concluded that the transaction was unlikely to substantially reduce competition under the applicable legal test, although it acknowledged the loss of rivalry between the two banks. The sale illustrates the difference between a foreign bank being legally unable to buy a Canadian institution and foreign bidders not emerging during the sale process.
Canadian Western Bank Also Went to a Domestic Buyer
Another example involved Edmonton-based Canadian Western Bank, a lender known for serving businesses and entrepreneurs, particularly in Western Canada. National Bank of Canada announced plans to acquire Canadian Western Bank in June 2024, eventually completing the purchase on February 3, 2025. National Bank valued the transaction at approximately C$5.6 billion in total equity, including shares it already held. The deal significantly expanded National Bank’s western Canadian presence and combined two institutions with different regional strengths. As with HSBC Canada, the Torys legal analysis reported that foreign bidders were not involved in the Canadian Western Bank sale.
The transaction went through a formal regulatory review, with the Competition Bureau and OSFI examining the deal before the federal finance minister granted final approval in December 2024. One particularly revealing detail is that JPMorgan Chase acted as an investment adviser in connection with both the HSBC Canada and Canadian Western Bank transactions, according to Torys. The American banking giant was therefore involved in advising on significant Canadian banking deals even though it did not acquire the institutions itself. That distinction matters: American financial companies can participate in Canada’s banking industry in several capacities, including investment advisory work, without necessarily choosing to become retail banking competitors.
Canadian Banks Have Built Enormous Businesses in the United States
While American banks have generally maintained more specialized operations in Canada, Canadian lenders have expanded aggressively across the U.S. market. Federal Reserve data for June 30, 2026, show that U.S. banking offices controlled by Canadian banking organizations held approximately US$1.59 trillion in assets. That includes major American banking businesses owned by institutions such as RBC, TD, BMO and CIBC. The expansion has unfolded over decades through acquisitions, branch development and investment in local operations, creating substantial American businesses under Canadian parent companies.
Several acquisitions illustrate the scale of that expansion. RBC completed its acquisition of California-based City National in November 2015, strengthening its American wealth management and commercial banking activities. CIBC purchased Chicago-based PrivateBancorp in June 2017, gaining an established U.S. commercial banking platform. BMO completed its acquisition of Bank of the West in February 2023, adding nearly 1.8 million customers and more than 500 branches and commercial and wealth offices. These transactions demonstrate how successfully Canadian institutions have entered and expanded within the American financial system. However, their substantial U.S. footprint does not establish that Canada legally prevents American banks from pursuing comparable opportunities north of the border.
Why American Banks May Have Chosen Not to Buy Canadian Lenders
Legal permission does not necessarily translate into a compelling business opportunity. Canada’s major banks have extensive branch networks, familiar brands and longstanding customer relationships, making it difficult for newcomers to capture market share quickly. James Thompson, a finance professor at the University of Waterloo, explained to the Associated Press that Canada’s relatively small market and powerful incumbent lenders can make entry expensive for American financial institutions. Even purchasing an established Canadian bank would involve considerable investment, integration challenges and ongoing competition against institutions with substantial financial resources.
HSBC’s decision to leave Canada offers an example of how commercial considerations influence banking strategy. After completing the sale of its Canadian operations in 2024, HSBC said its strategic review had considered its relatively low market share, the investment necessary for expansion and opportunities elsewhere. An American bank evaluating a similar acquisition would have to consider whether the potential earnings justified the purchase price, capital requirements and operating costs. Those considerations provide plausible explanations for limited bidding interest, but they are not proof of the private reasoning of individual American banks. Routledge’s remarks establish that foreign bidders were not automatically excluded; they do not reveal every commercial calculation behind the absence of U.S. offers.
What the Dispute Means for Canadian Banking Competition
The wider trade conflict gives the disagreement political weight, but it does not change the regulatory record. In an October 8, 2026, risk update, OSFI warned that the ongoing Canada–U.S. trade war was discouraging business investment, weakening consumer confidence and increasing financial market volatility. Those are genuine concerns for lenders and borrowers on both sides of the border. Yet an international trade grievance should not be confused with evidence of a banking prohibition. American financial institutions already have Canadian businesses, and recent acquisition opportunities presented another potential route into the market. Routledge’s rebuttal addresses that narrower issue without suggesting that Canada’s banking system is free from regulatory complexity or competitive obstacles.
For Canadian households, the more consequential question may be whether additional competition could improve banking services. Canada’s Competition Bureau warned in March 2026 that the country’s five largest banks dominate financial services and that new entrants face significant barriers. OSFI has also adjusted capital requirements to support lending flexibility, reducing its Domestic Stability Buffer from 3.5% to 3.0% in June 2026. Regulators continue to balance financial stability against the need for a more competitive market. Whether future challengers are American, Canadian or digitally focused, consumers will ultimately judge the results through borrowing costs, account fees, convenience and customer service. For now, the absence of American bids tells a materially different story from the one Trump has presented.
