Citizens Bank has closed the doors of its Broker Services division.
Spokesperson Rosetta Cannata confirmed that Tuesday was the department’s last day in operation.
She says the move was made largely because “the market is bringing less business, particularly in Toronto.” As a result, Citizens Bank has had to “scale back on lending” in general.
“Before the credit crunch,” Cannata said, “our focus was on attracting loan volume. Today, banks need to focus on balancing lending with deposits to protect capital. We are no different than any business or financial institution in that we have to match our level of service to the level of customer demand.”
From this, we’ll speculate that the broker division was not sufficiently profitable to justify its existence.
On the other hand, objectively speaking, Citizens rates and products haven’t been very compelling as of late. It’s tough for brokers to recommend mortgages that don’t have an obvious edge over the competition.
One of Citizens’ best features was their “100% rental income offset” policy. It even applied to unauthorized suites. But it’s hard to build a big mortgage business off niches like that.
They also had a Green Mortgage but we (personally) haven’t heard of any brokers having success selling that product. Its rate just never seemed very competitive.
Cannata said Citizens Banks’ strategy now is to “focus on direct retail members with whom (Citizens) can build a banking relationship.” That sounds familiar doesn’t it? BMO said almost the same thing when they closed their broker arm in February 2007. Like with BMO, we’ll have to watch over the next year or so to see if Citizens’ strategy pays off.
For now, Citizens Bank’s parent, Vancity, will continue to underwrite broker mortgages in BC. In addition, the company will continue to offer residential mortgages directly to customers through its call centre, website, and its branches in Vancouver, Calgary and Toronto.
Citizens Bank was formed in 1997 by Vancity (currently Canada’s 2nd largest credit union). Citizens was created to be an online, national bank that would take Vancity “beyond the borders of B.C.” The company has been serving mortgage brokers since 1979 (originally through its predecessor Citizens Trust). They opened their Toronto Broker Centre just over two and a half years ago.
According to the company, Citizens has assets of $1.9 billion dollars and roughly 33,000 members.
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