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Equitable Bank’s New Deposit Machine
January 22, 2016
8:36 pm
Norman1
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Interesting CanadianMortgageTrends.com article Equitable Bank’s New Deposit Machine about the recently-launched EQ Bank.

The article includes quotes from Equitable Bank CEO Andrew Moor that indicate their expectations for EQ Bank. For the first year, Equitable Bank hopes EQ Bank will have 10,000 new accounts and $200 million of new deposits.

Some details are also given about how the deposits through EQ Bank, at 3%, could be profitably used.

January 23, 2016
2:10 am
Loonie
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Thanks for the article, Norman.

This reminds me of a video I saw on the internet not too long ago. I think it was on youtube. It was a cartoon-style presentation of what happens when you deposit money in a bank. It showed how it doesn't sit still but passes through several transitions and is loaned out repeatedly so that, overall, the profit on it is much greater than you would think. I'm not quite clear how the attribution of that profit worked out, but it was interesting to see how the bank could potentially afford to pay us more interest.

So, if there is $400 billion that Cdns have in non-interest bearing accounts, and a new bank hopes to access $200 million of it (according to the article), that leaves tons of room for a lot of new Schedule One banks to possibly open.

They mention Street Capital as pending application for bank status. Is there somewhere we can look online to see where new banks might be coming down the pipeline?

January 23, 2016
7:36 am
Koogie
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Norman1 said

Interesting CanadianMortgageTrends.com article Equitable Bank’s New Deposit Machine about the recently-launched EQ Bank.

The article includes quotes from Equitable Bank CEO Andrew Moor that indicate their expectations for EQ Bank. For the first year, Equitable Bank hopes EQ Bank will have 10,000 new accounts and $200 million of new deposits.

Some details are also given about how the deposits through EQ Bank, at 3%, could be profitably used.

Thanks. Very interesting.

January 23, 2016
10:10 am
Norman1
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Loonie said
...
So, if there is $400 billion that Cdns have in non-interest bearing accounts, and a new bank hopes to access $200 million of it (according to the article), that leaves tons of room for a lot of new Schedule One banks to possibly open.

They mention Street Capital as pending application for bank status. Is there somewhere we can look online to see where new banks might be coming down the pipeline?

One does not have to be a Schedule I bank under the Bank Act to accept deposits. Trust companies and loan companies, under the federal Trust and Loan Companies Act, can accept deposits too.sf-smile

According to Financial Post article How to build a bank, Canadian banking licenses are granted by the Office of the Superintendent of Financial Institutions Canada (OSFI).

OSFI's site has a list of approved banks among their Who We Regulate page. But, I didn't find a list of pending bank applications on their site.

However, applicants seem to be required under subsection 25(2) of the Bank Act to publish a notice of their application in the Canada Gazette. I found this notice there for Street Capital's application to continue as a bank:

STREET CAPITAL FINANCIAL CORPORATION

LETTERS PATENT OF CONTINUANCE

Notice is hereby given, pursuant to subsection 25(2) of the Bank Act (Canada), that Street Capital Financial Corporation intends to file with the Superintendent of Financial Institutions, on or after October 15, 2012, an application for the Minister of Finance to issue letters patent continuing Street Capital Financial Corporation as a bank under the Bank Act (Canada), with its banking business primarily focused on residential mortgage lending as well as other consumer lending and related services.

The bank will carry on business in Canada under the name of Street Capital Bank of Canada in English and Street Capital Banque du Canada in French, and its head office will be located in Toronto, Ontario. The applicant is a subsidiary of Counsel Corporation, an Ontario corporation that will hold a significant interest in shares of the bank.

Any person who objects may submit an objection in writing to the Office of the Superintendent of Financial Institutions, at 255 Albert Street, Ottawa, Ontario K1A 0H2, on or before November 12, 2012.

Note: The publication of this Notice should not be construed as evidence that letters patent will be issued to continue Street Capital Financial Corporation as a bank. The issuance of letters patent will be dependant upon the normal Bank Act (Canada) application review process and the discretion of the Minister of Finance.

September 22, 2012

STREET CAPITAL FINANCIAL CORPORATION

I think doing Google searches for "APPLICATION TO ESTABLISH A BANK" and "LETTERS PATENT OF CONTINUANCE" against the site http://www.gazette.gc.ca would be an indirect way to locate pending bank applications.

January 23, 2016
3:39 pm
Loonie
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Thanks, Norman. I got as far as OSFI but didn't find anything there either.

Wouldn't you expect the banks that we would be interested in to be Schedule 1 banks, insured by CDIC?

I tried the searches and found they bring up too many possibilities to be of practical use. The majority seemed to be from institutions which I felt were unlikely to get into retail banking.

January 23, 2016
6:36 pm
Norman1
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According to Canadian Bankers Association: Banks Operating in Canada, both Schedule I and Schedule II banks can accept deposits with CDIC coverage and may be of interest.

January 23, 2016
6:39 pm
Norman1
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Loonie said
...
I tried the searches and found they bring up too many possibilities to be of practical use. The majority seemed to be from institutions which I felt were unlikely to get into retail banking.

Aspiring to be a bank doesn't mean one wishes to enter the retail banking market, offering savings accounts and chequing accounts to the general public.

Some banks are content to just issue GIC's through deposit brokers and advisors.

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