Limits on Foreign Bank Non-Financial Activities

Summary#

This is a proposed regulation called the Non-Financial Activities (Foreign Banks) Regulations under the Bank Act. It would set numeric limits and reporting rules on the non‑financial businesses foreign banks and their groups can own or run in Canada. Comments are invited for 30 days after publication on October 17, 2026.

What it does#

• Sets revenue limits for non‑financial activities by foreign‑bank groups:
  • For groups with aggregate equity less than $12 billion, non‑financial revenue (combined across the group) cannot exceed the lesser of $1.5 billion and 15% of the group’s total annual revenue.
  • For groups with aggregate equity of $12 billion or more, the cap is the lesser of $1.5 billion and 10% of group annual revenue.
  • An individual authorized foreign bank must ensure its own non‑financial revenue does not exceed 10% of its annual revenue.
• Limits exposure measured against regulatory capital:
  • The total value of shares, loans and guarantees a foreign‑bank group has in Canadian non‑financial or majority financial services entities cannot exceed the lesser of $1.5 billion and 10% of the group’s regulatory capital.
• Reporting and disclosure requirements (for larger groups):
  • Groups with aggregate equity of $12 billion or more must notify the Deputy Minister of Finance within 30 days of acquiring control of, or a substantial investment in, a Canadian target. The notice must describe the deal, ownership stakes, business activities and strategic purpose.
  • The same groups must provide an annual description of their non‑financial activities and how the rules’ calculations were done — within six months after each financial year end.
• Prohibits certain businesses:
  • An authorized foreign bank may not run a business that gives customers temporary possession of personal property or movables (including motor vehicles) in Canada for a purpose other than financing the customer’s purchase.
• Confidentiality and exemptions:
  • Information provided to the Department of Finance under these rules is treated as confidential.
  • Several routine banking‑related activities (payment processing, accounting, payroll services for employers, certain services for subsidiaries, etc.) are excluded from the caps.
  • A temporary exemption for certain information‑technology activities applies for two years after the rules come into force.
• Repeals older IT rules:
  • Repeals the Information Technology Activities (Authorized Foreign Banks) Regulations and the Information Technology Activities (Foreign Banks) Regulations.
• Timing:
  • The regulations would come into force on the same day as section 322 of the Budget Implementation Act, 2018, No. 1 (or on registration if later).
• Consultation:
  • The notice invites submissions and provides contact details for David Tousignant, Director General, Financial Institutions Division, Department of Finance.

Who's affected#

• Foreign banks that are authorized to operate in Canada and their corporate groups.
• Canadian companies that foreign banks might buy, invest in, or control — including tech or fintech subsidiaries.
• Compliance, legal, and finance teams at foreign banks and at Canadian targets.
• Customers of banks if a bank’s non‑financial offerings are limited or changed (for example, certain rental‑type services).
• The Department of Finance (for collecting and handling reports).
• If it is unclear who exactly will be affected in specific cases, the rules include detailed definitions and calculations that will determine whether a particular ownership, investment or activity falls under these limits.

Why it matters#

• These rules would limit how much non‑bank business foreign banks and their groups can do in Canada. That affects what kinds of non‑financial services a foreign bank can own or provide here.
• By putting caps tied to revenue and regulatory capital, the rules aim to keep foreign banks focused on financial services and reduce the scale of unrelated commercial businesses owned by those banks.
• The reporting requirements increase transparency about foreign banks’ Canadian investments and activities.
• A specific ban on giving temporary possession of movables (like car rentals) for non‑purchase purposes could stop banks from entering certain consumer rental businesses.
• Because this is a proposed regulation, the final details could change after the public comment period.