Canada Orders Wealth One Bank Shareholders to Divest | Page 4 | Wealth One Bank of Canada | Discussion forum

Given that CUs are owned by members, I don’t understand how shareholders could get “wiped out” AND depositors “made whole”.

Loonie said
There is nothing "silly" about investing in a GIC at a small CDIC-insured bank if you find the rate sufficiently attractive. It's a smart move for many people. So be it.

If you have a concern about sanctions, you should at least recognize that that is primarily an ethical concern, not a financial one. Now that sanctions have been applied, W1 is on a more sound ethical footing than it was earlier.  

I agree that if one wants to buy GICs from a small bank such as W1, it may be just fine for that depositor. While W1 has not turned a profit since inception (anyone can see the financial statements on the OSFI site - I do it from time to time), I do not believe W1 is on the verge of bankruptcy as per Mordko's post for various reasons which I will not go into here.

However, I would not be as sure as Loonie that W1 is on a more sound ethical footing because some sanctions have been applied by Freeland.

How could savers here possibly "lack information" when you have been assuming their ignorance and instructing them in detail on markets, insurance, political history and so on; and going on ad nauseam about how terrible, "silly" and now "unwise" it would be for them to buy a GIC from W1?

It is clearly hard for you to believe but some people have other views than yours and have made informed decisions to buy. I wouldn't call them "silly" or "unwise"; maybe "shrewd". Every investment is a calculated decision. Some people use different calculators.

AltaRed said

canadian.100 said

While W1 has not turned a profit since inception (anyone can see the financial statements on the OSFI site - I do it from time to time),  

I did not know that. I learned something today. Thank you.  

AltaRed - Since you are interested, I will give you the figures from the latest W1 financial statements included on the OSFI site.

- LOSS for 2023 to the end of the 2nd Quarter $6,686,000

- RETAINED EARNINGS (NEGATIVE) which represents the cumulative LOSSES from inception $60,434,000

Vatox said
Why would any investors take part with losses like that!?  

Investors may want to launder Yuans. Clients’ behaviour is more puzzling assuming its with knowledge. They would take a calculator, put in 3.65% interest rates on one side of the scale, regulatory sanctions, money laundering and client data harvesting on the other and go “well worth it!” Apparently.

Loonie said
It is clearly hard for you to believe but some people have other views than yours and have made informed decisions to buy. I wouldn't call them "silly" or "unwise"; maybe "shrewd". Every investment is a calculated decision. Some people use different calculators.  

Trying to figure out how the risk/reward ratio works for anyone investing in GICs at W1B
Using the GIC rate table on this site
https://www.highinterestsavings.ca/gic-rates/

YR, W1B GIC Rate, Next best GIC Rate, Difference between W1B and next best
1, 5.98, 5.95 TNG, 0.03
2, 5.68, 5.70 LBC/Peoples, -0.02
3, 5.38, 5.35 OAK/MOT, 0.03
4, 5.28, 5.20 MOT, 0.08
5, 5.28, 5.20 MOT, 0.08

Given that W1B is :

under ministerial order,
has racked up 60M worth of losses, never turned a profit,
and is not responding timely for some people on this forum.

How is the risk reward benefit worth it?
Asking for improving my own knowledge, and not calling anyone names
I must be missing something, like hidden costs etc.

AltaRed said
You may be thinking Motus Bank not making money. Wealth One is private and does not need to disclose* its financials to the public.

The discussion here regarding the soundness of and confidence in CDIC is well off-tangent to the subject of the thread and appears to be based on some 'down the rabbit hole' ideology. The real issue in this thread is the ethics of doing business with an entity where 'something obviously nefarious is happening' since Ottawa had to take unprecedented measures to ring fence the organization.

* But clearly does to the regulator and agencies such as CDIC.  

Yes, all federally-regulated financial institutions, public or private, have to disclose certain elements of their financial data on an annual basis on the OSFI website. This is how I have been able to get the Motus Bank financial information, despite Meridian Credit Union promising me Motus Bank would post annual audited financial statements on the Motus website. It`s imperfect, but it works. While Home Capital Group, Inc., is now private, we will still be able to see the financial statements of Home Trust and Home Bank; however, we will no longer see important metrics like efficiency ratios, a breakdown in direct-to-consumer deposits and brokered deposits, nor will we see data on new customer growth. It`s unfortunate...perhaps a future Bank Act review, we can hope for regulators to also require publicly-traded and privately-held banks to post their actual annual audited financial statements in a central OSFI repository and, optionally, on their website as well.

As to the unprecedented measures, there is also the likelihood that Freeland the Liberal government took the steps merely as a tit-for-tat move in its dispute with the Chinese government, with WealthOne shareholders a casualty in that dispute. It is another move the Liberal government has made that will only further discourage investment.

I`m not even sure why they had to require the divestment...if the concern is that the bank is foreign-owned, why not just reclassify it as a Schedule II bank instead of Schedule I...

Cheers,
Doug

althisa said

Trying to figure out how the risk/reward ratio works for anyone investing in GICs at W1B
Using the GIC rate table on this site
https://www.highinterestsavings.ca/gic-rates/

YR, W1B GIC Rate, Next best GIC Rate, Difference between W1B and next best
1, 5.98, 5.95 TNG, 0.03
2, 5.68, 5.70 LBC/Peoples, -0.02
3, 5.38, 5.35 OAK/MOT, 0.03
4, 5.28, 5.20 MOT, 0.08
5, 5.28, 5.20 MOT, 0.08

Given that W1B is :

under ministerial order,
has racked up 60M worth of losses, never turned a profit,
and is not responding timely for some people on this forum.

How is the risk reward benefit worth it?
Asking for improving my own knowledge, and not calling anyone names
I must be missing something, like hidden costs etc.  

It's a fair question.
I think some people just don't care about these other factors and are focused on the rate and knowing there is CDIC coverage..For them, the only real risk is that their GIC will not be fulfilled, will be cut short, and they consider that risk small.
It's still a reasonable purchase if that's your view.
As I said above, I have no plans to buy any right now, so I am speculating about how others think. I would be looking for a higher return to offset possibility of GIC being curtailed due to failure. The bank has been unprofitable for seven years, so, presumably, it can continue to do so, but I'm not sure if the rate of decline is steady or worsening.. Perhaps Doug or canadian100 can e enlighten us on that.

I already have a small older GIC from W1 which runs another 3 yrs, so, if the Chinese govt has my info or whatever, it won't make any difference to add another one. It doesn't pay very well by today's standards, so I'd be happy if W1 went belly up and CDIC had to reimburse me! That's what they're there for.
I'm not impressed with the ethics of the banking industry in general. I (and family members) have been screwed around and lied to too many times at one bank or another.

canadian.100 said

By "investors" do you mean the shareholders of W1? or do you mean the depositors (people who buy HISAs and GICs)? As has been already covered, depositors have CDIC protection for those depositors hungry for W1's high GIC rates.

I would guess that the shareholders who own the bank are very wealthy individuals and have their reasons.  

I mean those that are the shareholders and those that financed the 60 million losses. Depositors certainly haven’t lost the 60 million.

There is no certainty for savers if there is a problem. Most obviously CDIC does not cover amounts over $100K. There are several other problematic scenarios. CDIC does not cover losses due to fraud.