• Earn 2.2% on all savings under $100,000.
• Earn 3.2% on all savings from $100,000 up to $5,000,000.
• Earn 1% on all savings over $5,000,000.

As of today, LBC Digital & B2B remain two tiered but at the same rate.

A few years ago, Laurentian Bank ended teller services at all their branches and closed fifty of their branches.

According to their December 2022 DBRS report, only 27% of the bank's deposits are from direct retail clients. Most of the bank's deposits (55%) are sourced through advisors and brokers.

Laurentian Bank has long detached its future from providing in-branch personal deposit accounts.

Lending is where the money is made. A bank doesn't need to offer personal deposit accounts to offer mortgages, car loans, or credit cards. The bank can collect the payments via pre-authorized debit from a deposit account elsewhere. Bill payment remittances allows borrowers to make extra payments as easily as the borrowers can pay their utility bills.

Laurentian Bank is in even more of a mess than with their banking system migration issues. A retail banking clientele that is almost exclusively Quebec-focused, has a significantly higher median age than their Canadian retail banking peers, and is seeing both net outflows in clients (i.e., aging out/dying off) and deposits, and, while they have an all-digital account opening process, they have just shot themselves in both feet by having monthly fees on all their chequing accounts. If they want to expand outside Quebec, where they have zero branches, they need to attract virtual, non-face-to-face clients. Virtual clients have no need to pay monthly fees for something they can get elsewhere, for free, without strings attached, from a number of competitors.

They remain under a strategic review, a review which seems likely to conclude without an offer to purchase the company. If they proceed down the current path (status quo), they will just gradually continue to see profit erosion, which will turn into losses in the next 12-18 months, and a gradual erosion of their business.

I imagine if there's one Canadian bank that keeps regulators up at night, it's Laurentian Bank, on capital adequacy and strategic business mix reasons. The "saving grace" for Laurentian, though, is that unlike Silicon Valley Bank, the majority of their clientele, though old, seem to be poor or nearly poor, with low average deposit balances, making it likely very difficult to see a bank run. 🙂

Cheers,
Doug

• Earn 3% on all savings under $100,000.
• Earn 4% on all savings from $100,000 up to $5,000,000.
• Earn 1% on all savings over $5,000,000.

I see LBC Digital & B2B page also two tiered but current at the same rate. I wonder will tier structured HISA become a new normal?

… don't have to answer!