Laurentian Bank HISA (tiered) | LBC Digital | Discussion forum

It is a matter of who a financial institution is trying to attract for their deposits. Liquid (demand) deposits must be managed carefully for risk management purposes, to avoid liquidity risk in event of a run on deposits. That can be done with tiered rates, a cap on deposit levels, or a combination of both. Does that mean that more HISA rates could be tiered in the future? No one knows.

It doesn't really matter. Laurentian Bank's LBC Digital products are grandfathered (no longer sold) products, at least for now; they could close them down at some point, or amalgamate them into existing Laurentian Bank products.

Laurentian Bank is in even more of a mess than with their banking system migration issues. A retail banking clientele that is almost exclusively Quebec-focused, has a significantly higher median age than their Canadian retail banking peers, and is seeing both net outflows in clients (i.e., aging out/dying off) and deposits, and, while they have an all-digital account opening process, they have just shot themselves in both feet by having monthly fees on all their chequing accounts. If they want to expand outside Quebec, where they have zero branches, they need to attract virtual, non-face-to-face clients. Virtual clients have no need to pay monthly fees for something they can get elsewhere, for free, without strings attached, from a number of competitors.

They remain under a strategic review, a review which seems likely to conclude without an offer to purchase the company. If they proceed down the current path (status quo), they will just gradually continue to see profit erosion, which will turn into losses in the next 12-18 months, and a gradual erosion of their business.

I imagine if there's one Canadian bank that keeps regulators up at night, it's Laurentian Bank, on capital adequacy and strategic business mix reasons. The "saving grace" for Laurentian, though, is that unlike Silicon Valley Bank, the majority of their clientele, though old, seem to be poor or nearly poor, with low average deposit balances, making it likely very difficult to see a bank run. 🙂

Cheers,
Doug