Canada’s 7th Largest Bank Seeks Household Name Status
Canada’s seventh-largest bank, EQ Bank, is relatively unknown to the majority of Canadians. Recently, CEO Chadwick Westlake announced plans to significantly elevate the bank’s profile and reach a broader audience.
Transformative Acquisition of PC Financial
In a bold move expected to close this year, EQ Bank aims to acquire PC Financial, specifically its Mastercard portfolio and PC Money accounts. This partnership with Loblaw Cos. Ltd. and its PC Optimum loyalty program is a strategic step towards becoming a household name.
According to Westlake, the deal is crucial for building trust and visibility in a market where 80 to 90 percent of Canadians remain unaware of EQ Bank’s existence. “We will become a household name by the end of this year,” he stated confidently.
Changes at EQ Bank
The bank is not only focusing on this acquisition but is also undergoing significant internal changes. Westlake took over as CEO in August 2022 after the unexpected passing of Andrew Moor, who had led the bank for 18 years. Other notable new hires include Anilisa Sainani, who joined as CFO around the same time.
In addition to leadership changes, EQ Bank has moved to a new head office, reflecting its ambition to grow beyond being a digital-only bank.
Challenges and Strategies for Growth
Despite the changes, EQ Bank aims to maintain operational efficiency. Last fall, about eight percent of the workforce was laid off to control rising expenses. Westlake highlighted that maintaining trust is essential. “Digital-only banks plateau at a certain level,” he noted, emphasizing the importance of customer connections.
Market Position and Future Outlook
EQ Bank is significantly dependent on the mortgage market, which varies from the more diversified portfolios of the Big Six banks. However, it also targets alternative mortgages for self-employed individuals who may not qualify for conventional loans.
- Current Challenges: Increased loan losses due to economic uncertainty.
- Analyst Opinions: Mixed, with some seeing growth potential while others express caution about credit quality.
- Growth Strategies: Expanding grocery store pavilions instead of traditional branches, enhancing operational efficiencies.
While the acquisition of PC Financial addresses a gap in their service offerings, it does not include wealth management services. Westlake is actively seeking partnerships or acquisitions to fill this void.
Industry Landscape and Competitive Forces
As EQ Bank prepares for transformation, other digital banks are expanding their service offerings, such as Wealthsimple’s launch of a credit card. The federal government’s push for open banking is expected to further change the competitive landscape in Canada’s banking sector.
In conclusion, if EQ Bank successfully implements its strategies, it may very well position itself as a formidable contender among Canada’s traditional banking giants.
