Small Canadian banks chase deposits to secure funding for troubled times - GIC Wealth Management

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Special Rates
1 year 1.10% ***
18 months 1.50% **
2 year 1.45% *
30 months 1.75% **
3 year 1.65% *
4 year 1.75% *
5 year 2.06% **
Minimum Investment $25,000 * Minimum Investment $50,000 ** Minimum Investment $100,000 ***

CDIC Deposits Insured up to $100,000 DICO Deposits Insured up to $250,000 Assuris Deposits Insured up to $100,000


Rates are subject to change without notice.
Certain minimums may apply. Call for details.
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Proud Members of the RDBA

GIC Wealth Management Inc. is a member of the Registered Deposit Brokers Association. The RDBA is the professional standards Self-Regulatory Organization (SRO) for the Canadian Deposit Broker Industry. Membership in the organization includes Financial Institutions, Deposit Brokers and their representatives. The organization is a strong supporter of a regulated industry and strives to work closely with federal and provincial governments and other regulators to insure investor safety and compliance with regulatory mandates.With every deposit we make on your behalf, a Client Consent and Information Form issued by the RDBA and signed by the client is required. If you have any questions about the RDBA, or the required form, please contact us.

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I have used the services of GIC Wealth Management Inc. for the past 8 years, and have found both Kevin and Brandon to be very helpful and knowledgeable in the investment industry. It has always been a quick and simple process to have my investments transferred to one of the institutions they represent. I will definitely keep my investments with GIC Wealth.”

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Small Canadian banks chase deposits to secure funding for troubled times

Nichola Saminather

Small Canadian banks chase deposits to secure funding for troubled times

PUBLISHED MARCH 31, 2020

TORONTO (Reuters) – Canada’s small financial institutions are waging a war for deposits, offering customers higher interest rates as they try to shore up funding, despite a drop in official interest rates to a decade-low.

While Canada’s biggest banks have a variety of funding sources including wholesale markets, smaller players are more dependant on sticky customer deposits and earnings, particularly as credit spreads widen due to the economic fallout of the coronavirus pandemic.

Larger banks can also access government liquidity support including security purchases, and have capital buffers they can draw down, both of which are limited for smaller institutions.

“The bigger banks are well-positioned to handle a financial downturn… so they don’t need to provide the best rates,” said Brandon Brot, principal at deposit broker GIC Wealth Management. Although most deposits of up to C$100,000 are government-backed, the big banks are perceived as safer, he added.

Existing clients have grown deposit sizes due to the higher rates, he said.

Last week, Vancity, Canada’s biggest credit union, introduced the 5-year Unity term deposit paying 3% interest, more than double its other offerings.

Home Capital Group (HCG.TO) subsidiary Oaken Financial, which funds loans by sister company Home Trust, has raised its rate to 2.95% for five-year guaranteed investment certificates (GICs), after initially dropping it after the first central bank rate cut.

It raised the rate to be among those institutions offering better rates, said Melonie Dixon, vice president for deposits at Home Trust.

p>Equitable Group’s (EQB.TO) EQ Bank pays 2.45% on three-month GICs, higher than some longer-term products. Equitable declined to comment.

That contrasts with current five-year GIC rates from 1.05% to 2.05% at Royal Bank of Canada (RY.TO), TD Bank (TD.TO), Bank of Montreal (BMO.TO), Bank of Nova Scotia (BNS.TO), Canadian Imperial Bank of Commerce (CM.TO) and National Bank of Canada (NA.TO).

Vancity, where retained earnings make up almost 98% of funding, introduced Unity following an increase in demand for loan deferrals and short-term lending, Chief Executive Tamara Vrooman told Reuters.

“There’s going to be a haircut on margins… but it’s not our first concern,” Vrooman said. In the first five days, Vancity had raised C$23.8 million of its C$200 million target.

Between 47% and 61% of the Big Six banks’ funding came from deposits at 2019 end, with much of the rest from markets, according to ratings agency Moody’s.

“To the extent that smaller financial institutions use (deposits) more than big banks for funding, they’re going to compete harder for them,” said Jeremy Kronick, associate research director at think tank C.D. Howe Institute.

Reporting By Nichola Saminather; Editing by Denny Thomas and Andrea Ricci

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