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Rick said

Got this the other day after I emailed a response to Peter Aceto, President & CEO, Tangerine. I don't think he personally got my email, but Angela did.

Hello,
Customer service is very important to us and we’d like to apologize for this disappointment. We assure you that your feedback will be forwarded to the right team for future consideration. We periodically extend short-term savings offers and promotions to our Clients and because these are based on each Client's savings history with the bank - offers can vary. We’re committed to providing great rates and banking experiences for all of our Clients.

If you have any questions, feel free to let us know! You can also check out our FAQs at tangerine.ca or visit the “Contact Us” page to find other ways to get in touch.

Thanks for your email,

Angela
Client Services

"Apologize: to express regret for doing or saying something wrong." - Merriam-Webster. My emphases.

To Rick: thanks for sharing the e-mail from Tangerine's Client Services team. It's important to note that e-mails to Peter Aceto, particularly those to his public Tangerine e-mail address, are handled by what's called an "Office of the President & CEO," a formal department or office of Tangerine Bank that is typically the final step in the bank's required "complaint resolution process" before the matter is shuttled off to the bank's internal Ombudsman and then, possibly, to the external banking & investments adjudicator, which can be either the Ombudsman for Banking Services and Investments (which Tangerine uses) or ADR Chambers (which, I believe, only TD, RBC and, recently, DirectCash Bank use).

They likely "hand pick" which e-mail messages they want to make Peter aware of or they likely maintain a statistical database by complaint type and then update him on a weekly and monthly basis. They may even keep tabs on specific complaint descriptions and update him in a generic sense.

To Loonie: in the most recent fiscal quarter for which data is available (second quarter, ended May 31st, 2016), Tangerine Bank reported net income attributable to its common shareholder, The Bank of Nova Scotia, of $38.783 million. Above that line, it paid out roughly $48 million in compensation and benefits to staff and company executives and also spent just shy of $27 million on marketing & advertising expenses. As the "promotional interest" is paid out as "additional interest," it's unclear if this is the separate "interest expense" deducted from "interest income" or if it's categorized as an advertising/marketing expense, though I highly suspect the former. That said, new client "bonuses" would definitely be an ad/marketing expense. Total interest and non-interest (i.e., service charge(s)) income, or gross revenue, was about $222 million.

For comparison, let's compare that to the fourth quarter of fiscal 2011, ended Oct 31st, 2012, the final date under ING Groep's ownership: $489 million in net interest/non-interest income (or gross revenue) but it also had substantially higher salaries/benefits compensation at about $84 million and $31 million spent on ads/marketing. Net income (profit) was about $121 million.

I wasn't too surprised, when I thought about it at first, to see the higher revenues because by now, Tangerine has substantially wound down more than half of its mortgage portfolio Scotiabank immediately put into run-off and Scotiabank also forced it to exit the mortgage & deposit broker channels, most recently jettisoning the self-directed discount broker-held Tangerine Cash Investment Savings Account, so it's lost those channels for primarily mortgage growth. What did surprise me quite a bit is I had expected the (a) the ad/marketing expenses to be somewhat higher yet it's relatively the same to down a bit and (b) the net profit margin to be higher relative to the lower expenses and lower gross revenue. Yet, it wasn't - seems to be a roughly 10-12% net profit margin versus a 23-25% net profit margin.

So, I thought maybe I was comparing apples to oranges with a Q2 2016 versus Q4 2011 comparison so I looked at Q2 2011: while gross revenue in Q2 2011 was only about $259-289 million, it was still substantially more profitable.

This raises two (2) questions: while Scotiabank is likely happy with Tangerine's customer & product growth metrics, particularly over the long-term, are they happy with its declining profitability?

This does seem to, possibly, confirm my theory for the "targeted" promo offers: Scotiabank likely is trying to cut their interest expense and, thereby, increase profitability in the short- and medium-term.

That said, longer term, I think Scotiabank is willing to sacrifice Tangerine's short- and medium-term profitability by continuing to offer even "targeted" promos to attract, and also largely retain, Tangerine's deposits. Tangerine provides at least, or close, to 10% of Scotiabank's total deposits, I believe, and have been pretty constant, even growing slightly, from Scotiabank bought them, at $30 billion. It's serving its purpose to Scotiabank as an important regulatory "capital buffer" and that, to Scotiabank, is worth its weight in gold (especially important as Scotiabank slows its mortgage book growth but focuses on aggressive expansion in unsecured personal lending such as lines of credit and credit cards and also in auto loans, which are a higher margin).

Cheers,
Doug

bpwest said

Tangerine chatter has subsided...retention offers in response to calling in before summer rate expired reportedly were 2.50% or 3.00%; I received 2.50% retention offer, 90 days, full balance...

Targeted Oct 5 new money offers reportedly 2.00, 2.23, 2.34, 2.50, 2.62, 2.66, 2.95, and 3.00%....of course, there were likely some/many who received no offer with either strategy!!

I called Tangerine yesterday, and inquired if my rate could be bumped to 3.00%, nope...

Bottom line, IMO, we can't really know if requesting a retention 'bird-in-the hand' offer will be better or worse than unknown/uncertain 'new money' offer...Late June I moved monies to PC Financial, briefly, and then back to Tanga, a bit of a hassle, late Sept phoned and received Tanga retention offer, late December...dunno...

On those that didn't receive offers, I wonder if those are limited just to those who are named as a "secondary" account holder on a joint account and hold no other joint accounts where they are "primary" account holder or a sole account in their own name? If so, that would at least provide a strategy to receive an offer. The variances in offers, however, is a rather disturbing trend.

Cheers,
Doug