Canada’s 7th Largest Bank Strives to Become a Household Name

EQ Bank, currently Canada’s seventh-largest bank, is working hard to make its name well-known among Canadians. Led by CEO Chadwick Westlake, who took the helm in August 2023, the bank is on a mission to transform its profile with a significant acquisition. In December, EQ Bank announced plans to acquire PC Financial, a deal expected to close this year.

Strategic Transformation of EQ Bank

Chadwick Westlake is determined to raise EQ Bank’s visibility, stating, “We will become a household name by the end of this year.” This acquisition includes the PC Mastercard portfolio and PC Money accounts, along with a partnership with Loblaw Cos. Ltd. and its PC Optimum loyalty program. This collaboration is set to enhance EQ Bank’s presence across grocery stores and ATMs nationwide.

Current Banking Landscape

Despite digital-only banking trends, EQ Bank’s strategy targets real-world consumer interactions. Westlake believes trust is crucial in banking, particularly in a market where many Canadians are already comfortable with established players. While branches won’t be part of EQ Bank’s future, they plan to expand their presence in grocery store kiosks.

Operational Adjustments

To maintain a lean operation, EQ Bank recently laid off approximately eight percent of its staff. This move followed rising expenses and reflects the bank’s commitment to efficiency. Additionally, EQB Inc., the parent company, has been managing increased loan losses attributed to economic instability. Analysts, including Mike Rizvanovic from Scotiabank, have noted the rise in concerning loans across EQ Bank’s portfolio, prompting the bank to bolster its credit loss provisions.

The PC Financial Deal

• The acquisition targets a range of new revenues and aims to diversify EQ Bank’s offerings.
• Analysts have mixed views on the deal’s impact, with concerns regarding credit cycles and loss ratios in the card portfolio.
• Despite apprehensions, others, like BMO’s Étienne Ricard, have raised price targets for EQ Bank based on the strategic advantages the deal provides.

Although the acquisition will significantly enhance EQ Bank’s footprint, it will not immediately address gaps in wealth management services, a critical area of growth for the bank. Westlake has expressed ambitions to fill this void through future acquisitions or partnerships.

Future Outlook

As Canada’s banking sector sees a shift toward greater competition, Westlake is optimistic. He notes that the growing presence of alternative banks provides opportunities for expansion, even as traditional banking remains dominant. The momentum of open banking initiatives positioned by the federal government could further disrupt the landscape.

With the right strategies and partnerships, EQ Bank aims to redefine banking in Canada and establish itself as a formidable competitor. The ongoing developments indicate a pivotal moment for EQ Bank as it strives to become a household name.