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EQ Bank Launched - 3% Interest Rate (For now?)
January 18, 2016
5:55 pm
2of3aintbad
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mechone said

Question , would you deposit more then the CDIC limit ? It is a bank and must pass government stress test right?

I wouldn't risk my capital for a little extra taxable interest.

January 18, 2016
8:51 pm
Norman1
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mechone said

Question , would you deposit more then the CDIC limit ? It is a bank and must pass government stress test right?

Equitable Bank currently has a DBRS credit rating of BBB(low). I think the answer depends on how one feels about investing money into something with that rating.

January 18, 2016
10:59 pm
reality
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Norman1 said

mechone said

Question , would you deposit more then the CDIC limit ? It is a bank and must pass government stress test right?

Equitable Bank currently has a DBRS credit rating of BBB(low). I think the answer depends on how one feels about investing money into something with that rating.

Is there a way I could get ratings for Canadian banks along with explanations? I have been following these boards for years but just finally registered tonight. I was going to park a lot more than 100K in EQ and would appreciate rating info and such.

January 19, 2016
5:31 am
dougjp
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Pardon my skepticism, but banking is serious business as are my funds, so I look at this in the most pessimistic way possible.

No joint account (when a spouse dies, how do you assess your chances to get money from these people easily?), $ 30k ETF withdrawal limit (what, on a savings account?), poor DBRS rating, goofy clown from the McDonalds commercial fronting for them in a TV ad but more relevant than that, the cost of TV advertising AND paying out 3% on deposits at the same time, savings deposits at that, and where are they going to place these funds profitably (impossible) = losing money.

I guess the biggest thing that bothers me is a bank that, to me, is not being honest. " The 3% interest rate is not a promotional rate ". I call BS. I remember well, as many of you will, how Canadian Tire years ago at the early days of TFSA had a good TFSA savings rate and then 3 months later as they had your money for the year because of TFSA government withdrawal and redeposit rules, dropped the rate to an noncompetitive level when nobody else was dropping rates. So the following year after that, they created a good rate again and made sure everyone saw them say "this is not a promotional rate" with a "!" added. Guess what, 3 months later, same thing they dropped the rate when nobody else was dropping rates!

Ask yourself, do you think this is the same act, or is it worse? I wonder how CDIC is viewing this latest massive change to business operations of one of the banks it covers.

"Keep your stick on the ice. Remember, I'm pulling for you. We're all in this together." - Red Green

January 19, 2016
5:37 am
netpi
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I would certainly not consider going over the $100k limit but otherwise do not see major risks in a bank that has no record of large loan losses - it's rating is more a reflection of size rather than risk in general - I also suspect they are going to use deposit money for funding mortgages - this company was originally a trust with the main business the supply of mortgage money and while it now includes a schedule 1 bank, it's primary business remains mortgages, both residential and commercial - 3% may well be competitive in terms of supplying funds for mortgages that will be loaned out at higher rates - I am only speculating here but I think this is a reasonable speculation as to how they might be able to offer, and continue offering, higher than standard market rates for their savings accounts

January 19, 2016
8:02 am
kanaka
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dougjp said

Pardon my skepticism, but banking is serious business as are my funds, so I look at this in the most pessimistic way possible.

No joint account (when a spouse dies, how do you assess your chances to get money from these people easily?), $ 30k ETF withdrawal limit (what, on a savings account?), poor DBRS rating, goofy clown from the McDonalds commercial fronting for them in a TV ad but more relevant than that, the cost of TV advertising AND paying out 3% on deposits at the same time, savings deposits at that, and where are they going to place these funds profitably (impossible) = losing money.

I guess the biggest thing that bothers me is a bank that, to me, is not being honest. " The 3% interest rate is not a promotional rate ". I call BS. I remember well, as many of you will, how Canadian Tire years ago at the early days of TFSA had a good TFSA savings rate and then 3 months later as they had your money for the year because of TFSA government withdrawal and redeposit rules, dropped the rate to an noncompetitive level when nobody else was dropping rates. So the following year after that, they created a good rate again and made sure everyone saw them say "this is not a promotional rate" with a "!" added. Guess what, 3 months later, same thing they dropped the rate when nobody else was dropping rates!

Ask yourself, do you think this is the same act, or is it worse? I wonder how CDIC is viewing this latest massive change to business operations of one of the banks it covers.

Sorry my comment self deleted on my iPad when I did a smiley.

January 19, 2016
8:28 am
reality
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reality said

Norman1 said

mechone said

Question , would you deposit more then the CDIC limit ? It is a bank and must pass government stress test right?

Equitable Bank currently has a DBRS credit rating of BBB(low). I think the answer depends on how one feels about investing money into something with that rating.

Is there a way I could get ratings for Canadian banks along with explanations? I have been following these boards for years but just finally registered tonight. I was going to park a lot more than 100K in EQ and would appreciate rating info and such.

Thanks for the opinions stated and "I'll take them with a grain of salt" but I'm more interested in facts. I want credit ratings for all Canadian banks so I can compare apples to apples. You know what they say about opinions "they are like ***holes everyone's got onesf-smile

January 19, 2016
10:57 am
Bill
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Personally, I don't care about credit ratings but I would never exceed the $100,000 CDIC limit (maybe we should start a lobby group to get that raised, it's been the same for a while). We set up, wherever we can, 3 accounts: one for me, one for my wife, one joint, so that way we can have a balance of $300K (for us that's more than enough to keep in one institution, no matter the rate) with no worries. Over the years I've accumulated A LOT of "high interest" accounts (and that's just with banks, I have no business with credit unions), most have about $5 in them as I put my money wherever rates are best this particular day. Sometimes I do nothing with an account for a years, then a promo comes along and "we're back!" (for a while).
Not too worried about the $30K limit on ETF transfers, just do more than one transaction over a few days.
To me, interest rates by definition are "promotional" as they all move them up and down as their business needs and the markets demand and their fine print says the same for all of them in that regard, even during official promotion periods. I'm fully get that 3% today does not guarantee 3% next week, I'm not guaranteeing my money will be there next week.
For me, these ebank accounts are about one thing only, i.e. to get the highest interest possible today for my extra cash (and no TFSAs, RRSPs, etc) that I don't want to invest. I like them as my expectations are minimal, I don't care about all their other features as I use a bricks-and-mortar big-five bank for my daily banking and as a conduit for my "high" interest account shenanigans.

January 19, 2016
3:09 pm
reality
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Bill I'm with you and agree on everything in your post but with one exception. I for personal reasons can't do joint or one for my wife so the $100K makes me nervous because I usually throw in triple that. That's the only reason why the bank credit ratings matter and I want to see them. Other than that our philosophies are identical. The feds aren't going to want to pay out on those guarantees or look stupid by letting a bank they approve go under especially in a matter of months. Chances of any Canadian bank going down are slim to none but I would still like to know how they all rate. Bad nerves....

January 19, 2016
3:58 pm
Bill
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reality, if you've got $300K to throw in a bank account and no wife, you've got zero reason to have bad nerves, you're laughing! Except for trying to keep potential wives or partners away! Want to trade lives?!
And re the bank rating agencies - didn't some of them have egg on their faces when all heck broke loose a few years ago? So I guess that could be another risk factor.
But if you're the nervous type (I would be too if $200K over the CDIC limit) then I guess you'll have to decide if the incremental interest, after tax, is worth the nervous times. Or maybe you can open joint accounts with people you absolutely trust (Mom, etc?) to get more CDIC coverage - though I'm sure you know this can be a terrible idea for various reasons.

January 19, 2016
5:02 pm
reality
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Bill you're too funny :). I didn't say I don't have an old ball and chain I said for personal reasons I won't use her. As far as risk yes hell broke loose but no banks went down. Again as I said before I wouldn't be so nervous if I could see their ratings and monitor them. I could drain the account pretty quickly if I saw them drop to say a B rating. You know what they say about joint accounts, there's three people you can have them with, me, myself and I...

January 19, 2016
5:16 pm
JustMe
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Who is this 'EQ Bank' anyway. Unless well established, for me this is no 'bank' but some kind of pyramid scheme. Offering 3% while the best are at 1.75% is just a bait. I am not saying you will lose your $ overnight but after a month or so it will be like jumping into Lake Ontario in February when rate goes to 0.6%. And I am sick and tired of bank jumping to get few pennies more. I am not opening new accounts anymore...

I have no issue putting more than 100K into CIDC backed BANK. With recent Tangerine offer of 3%/6 months I was getting healthy >$550 monthly interest. That is NO risk as it is actually Scotia Bank.
Thank you Tangerine for new laptop, Benjamin Moore paint for the whole floor, and few odds and ends at Princess Auto I always wanted to have but was stingy to spend money on...

January 19, 2016
5:58 pm
Loonie
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Funny how some people are afraid of risk in stock market etc but will accept risk of uninsured bank deposits.

January 19, 2016
6:31 pm
mechone
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Thanks for the feed back .I'm in the same boat as reality. I have 250 in CDF and 150 in peoples trust and another 100 in outlook I was thinking of moving the 250 out of CDF as Alberta is falling to pieces.

January 19, 2016
7:25 pm
dougjp
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mechone said

Thanks for the feed back .I'm in the same boat as reality. I have 250 in CDF and 150 in peoples trust and another 100 in outlook I was thinking of moving the 250 out of CDF as Alberta is falling to pieces.

Maybe the country is too. We have all learned the unthinkable can happen after watching Cyprus and Greece. I'd certainly get under the CDIC limit for starters. Why not begin by moving 95/100 of CDF to Bridgewater (yes that's still Alberta) and increase your interest earnings (based on current %'s)?

Back to EQ, on further consideration I'd place funds there if/once they create a joint account.

"Keep your stick on the ice. Remember, I'm pulling for you. We're all in this together." - Red Green

January 19, 2016
9:09 pm
Norman1
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reality said

Is there a way I could get ratings for Canadian banks along with explanations? I have been following these boards for years but just finally registered tonight. I was going to park a lot more than 100K in EQ and would appreciate rating info and such.

DBRS explains their ratings scale in their document Long-Term Obligations Rating Scale.

One can register on DBRS' site for free (non-trial) access to the current ratings.

Royal Bank, CIBC, and Bank of Montreal each currently have DBRS ratings of AA and AA(low).
TD Bank currently has DBRS ratings of AA, AA(low), and A(low).
National Bank has DBRS ratings of AA(low) and A(high).

January 20, 2016
4:34 am
dougjp
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For everyone's information, I e-mailed them yesterday about the joint account, and got this reply;

We are excited to launch with our Savings Plus Account, and it is just the start. Right now we are focused on building a strong base with the Savings Plus Account and enhancing the account’s functionality. As we grow we will add products and services to EQ Bank that will continue our focus on helping Canadians save money. We are working on the ability to offer Joint Accounts and TFSAs and are aiming to have them available in the future.

We are working diligently to get great new products and services available to you as soon as possible, we want to make sure we do it right, not just fast.
Currently, there is no estimate for additional products, however you should be notified via the message center in your profile of any new product releases and other great news.

"Keep your stick on the ice. Remember, I'm pulling for you. We're all in this together." - Red Green

January 20, 2016
6:38 am
amidat
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EQ Bank (Equitable Group) is a publicly traded company. So all of its financial information is readily available.
In 2014 they had 100m+ in earnings and are on pace to do better than that in 2015 (Q4 earnings not yet released). They also have 1.67 dividend yield which has been growing for the past 5 years.
So it appears that they are a healthy well established company.

January 20, 2016
9:54 am
Wiiliam
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Yeah I also read their annual report from last year and seems they are quite solid financially, and have been doing well.

January 20, 2016
10:01 am
netpi
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Bank ratings and CDIC insurance are not as comforting as they may on the surface seem - only some smaller Cdn banks have ever gone under (Northland Bank comes to mind as an example and it was taken over I believe by Royal) but the simple fact is that in the event one of the major Cdn banks went under, conditions would be such that there would not be enough money within the CDIC to pay out depositors - the question then becomes whether the Gov't of Canada would come to the rescue and that is not clear. It used to be thought that there was a more or less implicit guarantee the GOC would bail out a bank but recent changes in legislation including in particular the new "bail-in" provisions call into question what support the GOC would provide - so I kid myself in thinking that the $100k guarantee is my guarantee of safety and I never have more on deposit at any one bank but I often wonder if push came to shove whether that guarantee would be worth anything or if so, how much

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