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Equitable Bank acquires Concentra Bank
February 8, 2022
1:35 pm
Loonie
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Profitability is a concern for investors who buy stocks and bonds. For those of us depositing up to CDIC limits, it's hardly a concern. The worse that would happen would be that the FI would crash in the middle of a GIC term and you would lose the remaining anticipated interest but could reinvest elsewhere perhaps even at a better rate.

When so many were biting their nails over Oaken's (Home Capital) anticipated demise, I was able to stock up on their 5 yr GICs at above-market rates. These were very helpful in balancing the last few years of low rates.

While WealthOne was founded with the Chinese audience in mind, all their staff speak English, and all their senior managers were educated in Canada and are a well diversified group. https://www.wealthonebankofcanada.com/Personal/AboutUs/LeadershipTeam/ I don't see them as being limited by their Chinese connections except inasmuch as they don't appear to speak French, probably not available to QC. They've been very good to deal with, and i am not Asian.

Assuming they get going financially, they may very well expand their focus. It's the face of Canada of the future, a very mixed group.

As for traditional families, so-called, vs others, I don't think it's really a big issue for joint accounts. Lots of spouses who care about each other will continue to see a need for joint accounts, especially as they age. They don't all have separate piles of wealth to sustain them. Divorce rates are high but not overwhelming. And a lot of parents, divorced or not, continue to want to set up joint accounts with their children and even grandchildren. There will always be a need. Some FIs just aren't in the ballpark.

February 8, 2022
2:25 pm
canadian.100
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Loonie said
Profitability is a concern for investors who buy stocks and bonds. For those of us depositing up to CDIC limits, it's hardly a concern. The worse that would happen would be that the FI would crash in the middle of a GIC term and you would lose the remaining anticipated interest but could reinvest elsewhere perhaps even at a better rate.
While WealthOne was founded with the Chinese audience in mind, all their staff speak English, and all their senior managers were educated in Canada and are a well diversified group. They've been very good to deal with, and i am not Asian.
Assuming they get going financially, they may very well expand their focus. It's the face of Canada of the future, a very mixed group.   

Fair enough.
Since the security breach that occurred last year into personal information of WealthOne clients, I lost my interest in dealing with WealthOne. My personal information was disclosed to a third party, who obtained it by being able to hack into a WealthOne employee's email account that for some strange reason contained the personal information of many WealthOne clients. I think WealthOne needs to do better in regard to the security of client personal info. I have not had that experience with other FIs - at least that I am aware of. WealthOne being a new FI can not blame old systems - they are new and should have state of the art security which they do not. I have found EQ and Tangerine security far superior to WealthOne and that is important!

February 8, 2022
3:54 pm
Bill
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Funny you say that, canadian.100, because despite the fact they've been unfailingly polite and helpful on the phone I have the same unease with Wealth One, in my case also due to their data breach and also their (as has been said) "Chinese connections". Not sure if anyone else feels that way but I do, though it hasn't stopped me from loading up to CDIC limits. Maybe I'll regret it some day.

February 8, 2022
4:17 pm
AltaRed
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Loonie has a valid point that as long as there is CDIC coverage, one's assets are not at risk. The question is more one of comfort level.

When HCG went through its coronary, many depositors were uncomfortable even within CDIC limits, Loonie being an obvious exception, and did well with the higher rates HCG had to offer to keep and/or attract deposits.

February 8, 2022
5:14 pm
Loonie
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Well, there are things I dislike about every FI. It's a matter of degree, I guess, and of weighing what you consider most problematic. I find that I have to put up with a lot of dreadfully organized statements, for instance. The incompetence displayed at what amounts to reinventing the wheel on this score is scary! How hard can it be?

It seems to me that it's reasonable to think that any FI could have a breach. And many have, including some large established profitable ones that could have afforded the best available systems.

My thinking is that once they've had an issue like this the bad publicity is more likely to make them more careful, perhaps more careful than those who have not experienced an issue, but I could be wrong.

The bottom line is that I don't think we ever know what is going on
that we can't see. We don't really know how secure any of these FIs are, but neither can we avoid dealing with them.

I'd be happy with an old fashioned pass book, but that ain't gonna happen!

February 9, 2022
6:56 am
Jim Sherat
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Getting back to 'EQ' earlier in this thread ... I was about to pull the trigger on building 5yr GIC ladders with them for both my and my wife's TFSAs.

Was trying to determine if the news could have any implications, good or bad, for following this strategy? Possibly a reduction in their currently published rates ?
I've been sitting on high 5 figures removed from Meridian TFSAs late in Dec, and yet to contribute our 2022 $6K amounts.
At this point I feel I can be at peace with the rates shown, ie. up to 2.85% [5yr], even if Central Banks finally do make a move, and FI rates increase further.

Thoughts? Wait or Go? Funds have been sitting in HISAs at only 1.25%, so losing money daily.

February 9, 2022
7:11 am
savemoresaveoften
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Jim Sherat said
Getting back to 'EQ' earlier in this thread ... I was about to pull the trigger on building 5yr GIC ladders with them for both my and my wife's TFSAs.

Was trying to determine if the news could have any implications, good or bad, for following this strategy? Possibly a reduction in their currently published rates ?
I've been sitting on high 5 figures removed from Meridian TFSAs late in Dec, and yet to contribute our 2022 $6K amounts.
At this point I feel I can be at peace with the rates shown, ie. up to 2.85% [5yr], even if Central Banks finally do make a move, and FI rates increase further.

Thoughts? Wait or Go? Funds have been sitting in HISAs at only 1.25%, so losing money daily.  

if ur going with EQ, I would recommend just park at 1y 2%. At the end of 1 yr, u can lock in to a longer term at a higher rate if u wish. Losing 85bps in 1y which you only need ~21bps better on a 4y GIC 1year from now. 2.85% is not attractive to lock in to a 5y rate at this moment. Or the 2y at 2.5% which is also superior to the 5% 2.85% in my mind. But yes, do something since ur losing ~1% and thats a lot for just waiting.

My $0.05 worth.

February 9, 2022
8:30 am
Jim Sherat
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Thanks for the .05cents worth ... that may be a better option and definitely worth considering. It would at least give us a better chance of a significant rate improvement, across the board, one year from now? Perhaps up to .75 basis pts ?

Regardless, 1.25% taxable [in HISA] is NOT a situation I want to extend beyond this week. 2% tax free [in TFSA] may well be the best alternative, and I like EQ because they tend to always be in the upper quartile for best rates.

February 9, 2022
9:05 am
Bill
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I don't use it but I thought the ladder strategy was precisely so you stop trying to guess where rates will be in the future, no? And you're taking it as a given that rates will be higher in a year because that's the current consensus, but anything can happen and they may in fact be lower.

February 9, 2022
9:12 am
christinad
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I find that humorous if eq bank is targeting single customers as no one seems to want to acknowledge that the percentage of singles is increasing and makes up a significant portion of the population. However I’m wondering if it has to do with its more work administratively or risk of fraud. It would be sad if eq banks rate decreased, particularly with the potential for a decrease in Hubert’s rate.

February 9, 2022
9:19 am
Loonie
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It's a bit of a guessing game no matter what you do, and I can't say my idea is necessarily any better, but here's another option:

Stagger your purchases. Buy a one-year GIC now with 20% of the money, then a 2 year in a couple of months with another 20%, and so on to end of year. Next February, you can switch the first one to a five year at presumably higher rate. As the others mature put them into five years also.
It's a kind of compromise solution that enables you to take advantage of higher rates as they appear during the year - we hope. It gives you the flexibility to grab a great rate if it should come up.

February 9, 2022
11:16 am
AltaRed
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christinad said
I find that humorous if eq bank is targeting single customers as no one seems to want to acknowledge that the percentage of singles is increasing and makes up a significant portion of the population. However I’m wondering if it has to do with its more work administratively or risk of fraud. It would be sad if eq banks rate decreased, particularly with the potential for a decrease in Hubert’s rate.  

It is not just about targeting singles (never married or divorced) which are an increasing portion of the population. It is also about blended families where it can be important for finances to be kept separate for succession purposes. In our entire extended family, there are only 2 of ~10 families that are 'traditional' ones, i.e. married in their 20s and had kids and are still raising them together. Everyone else is single, divorced, or divorced and re-married, blended families with kids from each of the two parents, but not together, etc, etc. All of those are almost obligated to keep finances separated for succession purposes. Regardless, there are many reasons why NOT to have joint investments.

There can be more complications administratively regarding joint investments in terms of money flow (as compared to a bank chequing or savings account) but I don't think this is a driver. It is more likely fraudulent use of funds by a joint owner, and disputes on beneficial ownership of the assets themselves. Legal disputes abound in estates where a parent and child have a joint account whereby the surviving child tries to claim the assets for him/herself but doesn't really have beneficial ownership, i.e. joint ownership was intended to be for ease of administration only due to a deteriorating parent but no side agreement was in place for that joint account. The assets really belong to the estate to be divided among the Will's beneficiaries.

That is a long way of saying inappropriate use of joint accounts for which the financial institution gets tangled up in, wasting resources that could have been put to better use. That is really a different subject matter that has been discussed somewhat before. Joint investment accounts are of tremendous value when used correctly, and can be major grief when not used correctly.

Why Equitable Group doesn't have joint GICs we don't really know but they have chosen not to do so and don't appear to want that business. That is their call. Customers have options to go elsewhere.

February 9, 2022
12:29 pm
Loonie
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Nonetheless, lots of people need joint accounts, financial planners often recommend them, and most FIs offer them.

February 9, 2022
1:39 pm
Bill
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I agree, AltaRed, joint accounts are maybe becoming more of a bother than they're worth (especially with increased reporting and fiduciary responsibilities put on fi's as time goes on), good points about our society is way different than it used to be and will only be more so.

Anyway, no big deal, as has been pointed out the majority of fi's offer them, lots of place to get joint accounts for those who want them. These smaller banks are more niche players, they mine the areas where they see market gaps they can profitably fill (and anyway targeting young people vs tight-fisted geezers is way more profitable!) and let the big banks offer the full range of services, including the less profitable ones. That's one reason the smaller players can offer the higher rates that this site is dedicated to.

February 9, 2022
3:01 pm
Norman1
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Jim Sherat said
Getting back to 'EQ' earlier in this thread ... I was about to pull the trigger on building 5yr GIC ladders with them for both my and my wife's TFSAs.

Was trying to determine if the news could have any implications, good or bad, for following this strategy? Possibly a reduction in their currently published rates ?

I don't think the Concentra purchase will be much effect on EQ Bank rates.

Concentra Bank is much smaller than Equitable Bank. Concentra has around $11 billion of assets. Equitable Bank has around $36 billion of assets.

I expect more impact on Concentra, like the end of the 1.55% Wyth Financial HISA.

February 9, 2022
3:43 pm
Loonie
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Eventually, if they succeed, they will all offer joint accounts. That's the trend. Even sluggish EQ now offers joint HISAs. WealthOne understood that from the get-go and Oaken has always offered them.
Some banks will always complain that certain accounts are a nuisance. They love to complain about TFSAs but they are still eager to offer them. They are profitable, just like joint accounts

February 12, 2022
9:22 am
Doug
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AltaRed said
Loonie has a valid point that as long as there is CDIC coverage, one's assets are not at risk. The question is more one of comfort level.

When HCG went through its coronary, many depositors were uncomfortable even within CDIC limits, Loonie being an obvious exception, and did well with the higher rates HCG had to offer to keep and/or attract deposits.  

On that note, ultimately, though not initially at closing, I do expect Equitable Group to file regulatory paperwork to formally amalgamate Concentra Bank into Equitable Bank and Concentra Trust into Concentra Trust, to fully realize operational and legal synergies and eliminate wholly duplicative legal and regulatory compliance costs. It makes sense for them to maintain separate bank and trust company CDIC issuers; it doesn't make sense for them to maintain four bank and trust company CDIC issuers.

I don't know that Concentra Bank had this in their strategic plan (i.e., an acquisition), but I do think the rebranding and expansion into the direct-to-consumer business model of deposits and mortgages was part of a strategic plan to firstly legally rename the company as Wyth Financial Bank Canada (or similar) and then to either (a) sell shares in the parent company company in an initial public offering or (b) sell shares to another buyer, whether strategic or private investor. Equitable Group very likely approached Concentra Bank, with the heads of investor relations first meeting and things progressing to meetings between CEOs and, ultimately, their respective boards.

Ultimately, though, one brand will be utilized, and I do fully expect them to consolidate legal entities somewhat, which will mean impacts in terms of CDIC insurance limits on merged entities. Refer to the CDIC website for more details.

As to Norman1's point, the demise of Wyth Financial does not mean the complete demise of the Wyth Financial online banking platform. Time will tell, but perhaps EQ realized their platform, as innovative as it was, was holding them back in several ways, so they may look to migrate the EQ Bank customers to the Wyth Financial platform, and rebrand the merged platform as the EQ Bank online banking platform, with all customers becoming EQ Bank customers. sf-cool

Cheers,
Doug

February 12, 2022
9:33 am
AltaRed
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Good post (maybe because I agree with it). There is no reason to keep 4 CDIC memberships though it would be helpful if it was more convenient for depositors to be able to buy GICs from either the Bank or the Trust from one online page. Equitable Trust sells GICs but I've never known that before and it isn't, at least from my perspective, well known by the membership here.

As someone said somewhere, and I apologize for not remembering - Loonie I think, CDIC insurance allows for deposits from merged institutions to continue to be insured as if they were separate CDIC members. That clearly makes sense on GICs where depositors don't otherwise have the option to get back under $100k CDIC totals until GICs mature. So yes, if one has $100k in Concentra Bank GICs and $100k in EQ Bank GICs, CDIC coverage continues while the terms are still in effect.

I suspect all bets are off though once the funds are liquid in HISA accounts and I suspect there will only be one HISA offering.

February 12, 2022
10:23 am
Bill
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It's all on CDIC site:

"What happens to coverage if two CDIC members merge?
If two or more CDIC member institutions amalgamate, insured deposits made at each institution before the amalgamation continue to be insured separately up to $100,000 per depositor per category, as if the institutions had not amalgamated. The amount of separate coverage is reduced by any withdrawals made from those separate deposits, or as term deposits mature (or are redeemed). Coverage with respect to any deposits made with the entity that resulted from the amalgamation depends on the aggregate volume of the deposits you made at the institutions before they amalgamated.

If your existing deposits (i.e., the sum of deposits you had with the entities immediately prior to the amalgamation) add up to a total of $100,000 or more, any new deposits you make at the institution after amalgamation will exceed the $100,000 maximum, so they will not be insured by CDIC.
If your existing deposits add up to a total of less than $100,000, any new eligible deposits you make at the amalgamated institution will be added to those previous deposits, and the total will be insured to a maximum of $100,000."

February 12, 2022
11:14 am
Norman1
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CDIC Act subsection 13(1) says separate coverage will be provided for two years or until maturity of a term deposit that matures later than in two years' time:

Deposits with amalgamating institutions

13 (1) When a person has deposits with two or more member institutions that amalgamate and continue in operation as one member institution, in this section referred to as the “amalgamated institution”, a deposit of that person with an amalgamating institution on the day on which the amalgamated institution is formed, less any withdrawals from the deposit, shall, for the purposes of deposit insurance with the Corporation, be deemed to be and continue to be separate from any deposit of that person on that day with the other amalgamating institution or institutions that become part of the amalgamated institution for a period of two years or, in the case of a term deposit with a remaining term exceeding two years, to the maturity of the term deposit.

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