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Email this11:22 am
February 7, 2019
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Norman1 said
Dean said
.All True ⬆️But in the end, it's ... 'All About The Money' ... isn't it ?
Actually, it is about the profits and not the money.
The large banks have learned that it is better to not accept high-cost deposits when they can attract enough lower-cost ones.
RBC does know about Oaken's 2.80% savings account. RBC isn't going to match that 2.8% when it can attract enough savings account deposits with their 0.55% eSavings rate.
The banks have started to apply that discipline to their mortgage lending too. One isn't going to be offered their best mortgate rates now with no relationship. See bank CEO comments reported in Some banks rethinking strategy on mortgage competition.
Yep, all about profit.
We are down to one Big 6 Account that collects most of the retirement income and auto-pays all of the bills. The surplus is distributed to high profit (to us) non Big 6 HISA's and GIC's. I do now have one RIF redemption flowing to a Joint EQB Personal Account to qualify for their 2.75% across all our EQB HISA's.
| CGO |
11:48 am
April 6, 2013
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As well, lots of this is fake drama created by the media for entertainment and not information.
One can see how fake the competition drama is by events like last summer when Equitable Bank successfully closes $300 million deposit note issuance.
Challenger Bank Equitable Bank was originally going to issue $200 million of deposit notes. $605.6 million of orders came in. Equitable Bank bumped up the issue to $300 million and declined the rest.
Guess who helped Equitable Bank find those $600+ million of orders for its deposit notes?
The issuance was completed with BMO Capital Markets, CIBC Capital Markets, National Bank Financial Markets and Scotiabank acting as joint leads and bookrunners, with RBC Capital Markets and TD Securities supporting as co-managers.
1:24 pm
March 15, 2019
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Norman1 said
Guess who helped Equitable Bank find those $600+ million of orders for its deposit notes?
The issuance was completed with BMO Capital Markets, CIBC Capital Markets, National Bank Financial Markets and Scotiabank acting as joint leads and bookrunners, with RBC Capital Markets and TD Securities supporting as co-managers.
Underwriting (as opposed to lending money) debt issues is pure profits. Lending money ends up on your balance sheet carries the risk that you might not get paid back.
1:30 pm
March 15, 2019
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COIN said
Underwriting (as opposed to lending money) debt issues is pure profits. Lending money ends up on your balance sheet carries the risk that you might not get paid back.
What will Equitable do with $300mm?
2:33 pm
April 6, 2013
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Equitable Bank will add that $300 million from the two-year deposit notes to their pool of two-year money. Other money in the pool is from the two-year GIC's issued through deposit brokers and their EQ Bank channel.
All that money is likely lent out by now through various loans and leases.
8:22 pm
January 10, 2017
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Total Global Deposits: Big Six Canadian Banks (2022–2025)
Figures are in Billions of CAD
Bank2025 (FYE) 2024 (FYE) 2023 (FYE) 2022 (FYE)
TD Bank (TD) $1,484.4 $1,506.8 $1,196.1 $1,215.1
Royal Bank (RBC) $1,446.0 $1,409.0 $1,310.6 $1,204.8
BMO Financial $976.2 $982.4 $938.1 $848.4
Scotiabank (BNS) $966.3 $943.8 $935.4 $916.1
CIBC (CM) $775.1 $727.4 $704.7 $692.1
National Bank (NA)$428.0 $333.5 $302.2 $285.3
Combined Totals $6,076.0 $5,902.9 $5,387.1 $5,161.8
The big six are still slowly growing their deposits so, for now, there is big no incentive to change.
2:38 pm
October 7, 2019
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COIN said
What will Equitable do with $300mm?
December 3, 2025 - EQB Inc. (the parent company of EQ Bank) has entered into a definitive agreement to acquire President's Choice Financial (PC Financial) from Loblaw Companies Limited for $800 million.
7:50 pm
March 15, 2019
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Am I reading this correctly?
EQ is funding the purchase of PC entirely with debt?
5:44 am
April 21, 2022
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COIN said
Am I reading this correctly?EQ is funding the purchase of PC entirely with debt?
Isn't that a common practice, no different than folks using funds from their line of credit to invest? Just another form of leverage with the associated risks.
12:37 pm
August 4, 2010
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COIN said
Am I reading this correctly?EQ is funding the purchase of PC entirely with debt?
Actually, it doesn't look like there is any debt issuance at all, it is mainly equity in EQB:
EQB will acquire PC Financial for 1.15x book value at closing, excluding excess capital above a 13% CET1 ratio, for consideration estimated at $800 million, subject to adjustment pursuant to the terms of the Transaction Agreement. The consideration will be satisfied by the issuance to one or more subsidiaries of Loblaw of 7.2 million common shares of EQB, representing approximately 16% of EQB's issued and outstanding common shares as at the date hereof on a pro-forma basis, and the remainder in cash. In addition, prior to the closing of the transaction and subject to regulatory approval, Loblaw will release and receive approximately $500 million of excess capital and other value from PC Bank, for estimated total value of $1.3 billion to Loblaw. Pursuant to and subject to the terms of the Transaction Agreement, Loblaw will own a minimum of 17% of EQB's issued and outstanding common shares on closing of the Acquisition. Closing is expected to occur within calendar 2026, subject to customary closing conditions and regulatory approvals.
They are issuing a bunch of new EQB stock, and will pay whatever cash is necessary to top that up to the set price (that 1.15x book value of PCF at closing). Loblaws also gets to keep about $500 million of "excess capital" from PCF, above regulatory minimums. At the current price of $112.70, 7.2 million shares would actually be about $811 million, so there may not be any cash shipped over from EQB, depending on the share price at closing and however they calculate the PCF book value. It was $86.85 before the deal was announced, jumped to $98 that day, and has been as high as $126 briefly before retreating a bit.
Aside from that $500M in retained cash, Loblaw will wind up with around a 17% stake in EQB - they have to hold that for 4 years, and are prohibited from going over a 25% stake.
