Corporate observers were surprised to discover recently that the largest worldwide banker to F.W. Woolworth Co. was not one of the big New York banks but a Canadian institution.

That bit of information became public through a filing with the U.S. Securities and Exchange Commission in connection with a takeover bid for the five-and-dime chain by a Canadian company, Brascan Ltd. of Toronto.

But to Canadians, this was no great surprise - the size of Canada's banks is awesome and their huge capacity for lending is major factor in Canada's prominence in the North American takeover mania.

At a recent meeting of Canada's largest publicly owned real estate company, it was widely agreed that Canadian developers looking for big deals in California, Florida, Texas and other states have a significant advantage over their U.S. counterparts.

If a big Canadian company needs $50 million or $100 million for a project, its bank can provide the money quickly without putting together a consortium. "A builder in Chicago who wants to make a deal in Milwaukee has to find himself another bank, but we can do a project in either city using our bank here," a developer said.

And Canadian developers are interested in big deals. Las month, one Toronto developer bought a 50 percent interest in the town of Smithville, N.J. The community is close to Altantic City, which is enjoying a casino-fueled boom.

The Woolworth bid is a case in point. Brascan borrowed $700 million from its banker to finance the $1.125 billion bid. Although this would be the largest all-cash takeover ever in the United States, it is smaller than the recent $1.4 billion cash takeover of Pacific Petroleums Ltd. by Petro-Canada, the government oil company. The deal was financed by banks in Canada.

Canada has only 11 "chartered" banks. These are federally incorporated, privatedly owned institutions created by special acts of Parliament.

Five of the 11 banks, called the Big Five, account for more than 95 percent of all consumer and commercial banking activity in the country. Although Canada has roughly one-tenth the population of the United States, its banks are giants by any standard. Among the 300 largest banks in the world, three Canadians are in the top 45, and even the fifth largest Canadian bank is among the top 65 in the world.

Because Canada's population is strung out in a narrow band a few hundred miles deep aling the southern border, the big banks have developed huge branch systems. There are no provincial banks corresponding to state banks in the United States, and some of the Big Five have more than 1,500 branches.

Canadians are enthusiastic savers, and their money is pumped into banks and other savings institutions at a great rate. With a total of about 7,400 branches, the banks held more than 32 million accounts, according to latest Canadian Bankers Association figures.

Total assets of the banks amounted to more than $160 billion on May 31, 1978, with foreign currency assets amounting to $54.2 billion. One-third of Canadian bank activity is generated abroad through the 300 offices maintained worldwide by the banks.

Because of their size and reputation for solvency, they have no difficulty in attracting cash abroad to fund their foreign lending activities. No Canadian bank has failed since the co llapse of the Home Bank in 1923.

Foreign currency liabilities (money deposited with or loaned to the banks) soared from $6.3 billion last year. Canadian banks face stiff competition in world markets and even domestically from other major international bankers. Although Canadian laws prohibit foreign ownership of more than 25 percent in total of any bank, with no holder of more than 10 percent permitted, competitition comes from "representative offices" which direct potential borrowers to their offices abroad.

But in recent years, the "suitcase bankers" have added even more competition. A visiting banker takes a suite in a hotel, holds a reception for potential clients to drum up business packs his suitcase and is off again to the next major Canadian community to do it all over again.

The transient bankers and other foreign lenders operaiting in Canada have caused much concern and, in the next revision of Canada's banking legislation, foreign banks will be invited to set up shop as chartered bank in a restricted way.

The Bank Act - the federal legislation covering the industry - has had nine major revisions since Canada became a nation. Revisions are scheduled every 10 years, more or less, but the 1977 revision has yet to become law. It died with the dissolution of Parliament but will be revived after the federal election later this month.

The original proposals have been altered by parliamentary and senate committees. But what remains includes a provision under which foreign banks will be able to set up Canadian banking subsidiaries than can operate as chartered banks under strict limits.

The intention is to permit the foreign banks as a group to take on up to 15 percent of Canadian commercial banking activity. Each would be limited in the number of branches it can open and in total assets to $500 million, each subject to certain adjustments.The conditions may vary by the time the act becomes law, but this is the general philosophy of the participation that will be permitted.

Reasons for admitting foreign banks include getting them under federal supervision and subject to Canadian reserve requirements. The legislation also would encourage other Canadian financial institutions to convert to bank status.

IAC Ltd., a big sales finance organization, will become Continental Bank of Canada next month under a special act of Parliament. It will be the 12th chartered bank and can count on a lot of new company soon.

There are huge advantages in being a bank in Canada: the most obvious is the ability to tap deposit funds as a relatively-low-cost source of money to finance loan activities.

Another is the nature of bank legislation. A corporation is a bank only if it is so recognized by Parliament. Banks may engage in any activity that is not prohibited for them; other financial institutions in Canada may do only what their enabling legislation specifically provides.

Banks' "near-bank" competition - trust compaines and credit unions - cannot make commercial loans. Only in the past few years have trust companies been permitted to make personal loans, and they can do so only on a restricted basis.

Parliament's hope is that opening the door to more Canadian banks and foreign banks will increase competition, which could aid Canadian depositors and borrowers.

The five biggest banks are Royal Bank of Canada ($45.2 billion in assets at the end of February), Canadian Imperial Bank of Commerce ($41 billion), Bank of Montreal ($34.3 billion), Bank of Nova Scotia ($29 billion) and Toronto Dominion Bank ($24.3 billion).

The banks are profitable, so much so that they currently are embarrassed by bulging profits and super-low tax rates. First-quarter profits of the Big Five were $338 million, but the tax provision was $68 million, about a 20 percent rate.

Royal 's tax rate was 14.5 percent, and the rate for Commerce was 14.4 percent - the kind of rate paid by a single taxpayer with no dependents earning about $190 a week.

Another of the banks, Mercantile Bank of Canada, turned in an incredible 8.5 percent tax rate for the period. Its largest shareholder is Citibank, which sold 75 percent of the stock of Canadians in order to give it the amount of Canadian ownership required under special rules created in 1971 to deal with existing foreign-owned banks.

These low tax rates are the result of enthusiastic adoption by the banking and business community of two hybrid financing divice - income debentures and term preferred shares with variable interest rates.

They offer Canadian holders tax-free income. This is a big advantage because there are no other tax free income securities in the country.

Bank holdings of term preferreds zoomed from $81 million on Oct. 31, 1976, to more than $4 billion two years later. Holdings of income debentures went from less than $700 million to more than $3 billion during the same period.

The result is that tax rates are abnormally low. Canadian banks have been dumping the securities as quickly as possible on insurance companies, trust companies and other investors.

He fall federal budget scrapped the use of these instruments, with only a few exceptions permitted. The annual tax loss resulting from their use is estimated by the government at $500 million.

During 1976, before the banks got heavily into these instruments, their combined tax rate was about 37 percent.

With all that money lying around in bank branches on almost every major corner, bank robbery is a serious concern to the banking community.

In February, Canada had its first helicopter holdup. A man and woman in Montreal rented a helicopter, held the pilot at gunpoint, plastered the [WORD ILLEGIBLE] with police decals then swooped down to rob a bank branch in a suburban shopping center of $12,000 [WORD ILLEGIBLE]

The pair then ordered the pilot to land near a downtown subway station and they made their escape during the noontime rush hour. Both later were apprehended.

Overall there were 998 bank robberies last year, with 728 occuring in Quebec. The province accounted for "a deplorably high share of the market," according to Canadian Bank magazine, The 1,619 bank branches of Quebec have been subjected about 1,500 robberies in the past two years.

The bank magazine describes a typical Canadian bank robbery as being committed in Montreal by one or the bandits under 25 years of age armed with handguns.

"The bandits remained inside the branch less than one minute and robbed one or two tellers. The holdup alarm was sounded while the culprits were in the branch, and the police arrived within five minutes. No arrests were made," the magazine said.