Budget 2026 proposes Bank Act overhaul and first deposit insurance rise in over 20 years, to $250,000

The federal government proposed changes to the Bank Act in Budget 2026, tabled on November 5, that would loosen bank ownership rules for mid-sized lenders and raise the Canada Deposit Insurance Corporation (CDIC) deposit protection limit to $250,000 from $100,000 — the first increase in more than 20 years. The measures still need legislation to take effect.

Loosening rules to challenge the Big Six

The budget proposes raising the equity threshold at which banks must adopt widely held ownership structures to $25 billion from $12 billion, giving mid-sized banks more room to grow before they must sell shares to the public. Foreign bank subsidiaries in Canada with less than $8 billion in equity would be exempt from the public holding requirement if their parent is widely held and listed on a recognized foreign stock exchange. The government also proposes amending the Bank Act, the Trust and Loan Companies Act and the Insurance Companies Act to set a one-year timeline for decisions on applications from new entrants, and to give deposit-taking institutions more flexibility to transfer assets and liabilities when exiting. The Finance Department said the reforms are meant to encourage mid-sized challenger banks and expand competition in a market long dominated by the Big Six.

Deposit protection raised for the first time since 2005

The budget also proposes amending the Canada Deposit Insurance Corporation Act to raise the deposit insurance limit to $250,000 per eligible category from $100,000, the first change since 2005. Temporary high-balance coverage would apply after certain life events, such as the sale of a home, and the limit would be removed entirely for eligible deposits in registered and tax-free accounts. The government would also review the deposit insurance framework every 10 years. Finance Minister François-Philippe Champagne said the package is designed to launch Canada's "investment supercycle".

Legislation still required; consultation runs to January

All of the measures are legislative proposals that require Parliament to pass amendments to the Bank Act and the CDIC Act before they take effect; until then, the current $100,000 limit per category remains in place. The Finance Department is accepting written submissions on the deposit insurance reforms until January 8, 2027.

Sources: Finance Canada, Budget 2026, Chapter 1; Canadian Mortgage Professional; Wealth Professional.

(File photo: the Bank of Canada headquarters.)