There’s a new bank on the way. Equitable Trust will become Equitable Bank on Monday, July 1.

Equitable announced its bank application in February. Its conversion from trust company to bank happened incredibly quickly, which speaks to its long-standing status as a regulated institution, says CEO Andrew Moor.

Becoming a bank was a move intended to strengthen the company’s brand. That was important for various reasons, including:

• Promoting depositor confidence: Despite Equitable amassing $5.5 billion in deposits, “Canadians are still more comfortable depositing with a bank,” Moor told CMT. “Over a 10-year period, [Equitable’s bank status] will prove to be important on the margin.”

• Improving borrower perception: In addition to potentially lowering Equitable’s funding costs, being a bank instils confidence in borrowers. Brokers, which Equitable relies on to originate mortgages, will now be able to position the company as “Canada’s 9th largest bank.”

• Rolling out new products: “We have new products launching in the broker channel in 2013 (probably by the CAAMP Conference in November),” notes Moor. He says the company wanted to ensure they launch under a bank brand.

Despite OSFI’s increased vigilance with banks over the past year, bank status isn’t expected to limit Equitable’s product offerings. Unlike a Big 6 bank that doesn’t sell riskier non-conforming mortgages above 65% loan-to-value (LTV), Equitable is a specialized lender with specialized underwriting capability to mitigate those risks. So it will still offer up to 80% LTV on alternative lending products (depending on the borrower and location).

Equitable Bank will continue trading on the TSX under the symbol ETC.

Rob McLister, CMT

Last modified: April 26, 2017