Some local small banks are actively reducing stock of out-of-province deposits,
cutting them on a quarterly basis while shifting funding toward in-province
customers, a private-bank insider said. Regulators in July instructed some local
commercial and private banks on local-customer determination: of five elements —
ID address, habitual residence, primary business location, mobile-number
registration location and device-location data — at least three must match to
qualify as a local client. The guidance bars banks from taking on new non-local
business; existing non-local business must be fully wound down by end-2027 and
may not be extended via rollovers or restructurings. Regulators said the
requirement covers deposits as well as loans and expects natural runoff,
allowing a transition period rather than an immediate blanket cut-off.
