Meridian clears hurdle for new bank

Digital lender to be called ‘motusbank’

TORONTO • The biggest credit union in Ontario has cleared a key hurdle in its path to opening a new national bank, which it is calling “motusbank.”

Meridian Credit Union Ltd. announced plans to open a Canada-wide digital lender in August 2016. A notice published in the Nov. 10 edition of the federal government’s newspaper, the Canada Gazette, said letters patent had been issued under the Bank Act to incorporate a “Motus Bank,” effective Oct. 3.

Following questions from the Financial Post, a spokesperson said on Tuesday that Meridian is the parent company to “motusbank.”

“We are very pleased to confirm that OSFI (the Office of the Superintendent of Financial Institutions) issued motusbank with Letters Patent,” said Teresa Pagnutti in an email. “This means that we are one step closer to taking the Meridian banking experience beyond Ontario’s borders and making it available to all Canadians.”

Meridian initially targeted a 2018 opening date for the bank, but its chief executive said in an April update that it is now eyeing 2019 to launch the lender.

“Our specific launch date remains flexible,” Pagnutti said, “as it is contingent on final approval from OSFI.”

A spokesperson for OSFI, the federal banking regulator, said that letters patent are issued following a review by the watchdog, which makes a recommendation to Canada’s finance minister. The minister decides whether or not to issue the letters patent, they said.

After a lender has been created through the issue of its letters patent, they must then obtain an “Order to Commence and Carry on Business,” which is issued by the superintendent.

“A newly incorporated federally regulated financial institution may not commence operations until it completes the second step, which is there to ensure the federally regulated financial institution in question has the necessary systems, management structure, control processes and regulatory compliance management systems in place,” OSFI spokesperson Annik Faucher said in an email.

The Latin word “motus” means a movement or motion.

Meridian has also applied to trademark the “motusbank” name, according to a federal registry.

Meridian has said its bank would not be publicly traded and would ultimately be owned by Meridian members. Pagnutti added that the bank would be a separate legal entity that operates independently with its own member base and banking system.

“Like Meridian Credit Union,” said a 2016 press release on the bank, “it will

A CLEAR DESIRE IN THE MARKETPLACE FOR AN INNOVATIVE DIGITAL BANK.

not be hostage to quarterly earnings per share targets the way that publicly traded banks are, and will therefore take a long-term view in terms of how it invests to serve its customers.”

The bank would also be entirely digital, with no physical branches “for the foreseeable future.”

“We believe, and our research shows, that there is a clear desire in the marketplace for an innovative digital bank that offers a true full-service alternative to the big banks,” Meridian CEO Bill Maurin said in the 2016 press release.

Meridian is already ranked as the third-largest credit union in Canada, with more than 300,000 members, 90 Ontario-based branches and $20 billion in assets under management as of Sept. 30.

“Creating a bank will bring more canadians into the Meridian family and will generate new revenue, diversify sources of funding, and provide economies of scale,” said Meridian in its update on the bank’s progress.

Bill Maurin