Citizens Bank Stops Offering Mortgages

The Globe and Mail reported that Vancity's online banking arm, Citizens Bank, will stop offering residential mortgages and focus solely on credit cards and foreign exchange services for non-retail members. This has resulted in Vancity selling the majority of its retail loans, including mortgages, personal loans and secured lines of credit, to TD Canada Trust. This follows on the news back in November when Citizens Bank announced they were retreating from the broker channel.

Vancity President and CEO, Tamara Vrooman , says it is a good business decision because it returns capital that can be reinvested to enhance member services at the credit union. It also focuses Citizens Bank on what it does best.

"We pioneered online banking in Canada, but it's become a crowded marketplace," says Vrooman. "Our members have told us repeatedly that they want us to focus on our core strengths. We're local, we're community-focused, and our offering is based on building relationships and providing service. In a national, online market, we were unable to achieve the scale necessary to succeed. Therefore, the bank's business model wasn't making full use of our strengths."

The sale, which closed on August 5, 2009, means that:

• Citizens Bank will become a non-deposit-taking bank
• Citizens Banks' three boutique branches in Vancouver, Calgary and Toronto will close in December of 2009.
• Most members who currently have mortgages or loans with Citizens Bank will see their accounts transferred to TD Canada Trust. For the time being, until conversion in early 2010, Citizens Bank will continue to service these accounts. Customers can continue to call 1-888-708-7800 or visit www.citizenbank.ca for service on these accounts.
• Savings and chequing account members will be free to transfer their accounts to Vancity in B.C., or to another financial institution of their choice.
• Term deposits not in RRSPs or other registered accounts will be serviced until they mature and then paid out.
• Registered savings plans will need to be transferred to another financial institution of the member's choice.
• Members with group insurance on credit products will continue to have coverage for the period Citizens Bank is servicing the business until conversion in early 2010.
• In commercial lending, CB employees will continue to service existing loans outside of B.C. and new loans will be underwritten by Vancity within B.C.

None of Citizens Bank's 30,000 members need to take any immediate action. Citizens Bank will work closely with each member to minimize any inconvenience and provide the support they need to transfer their business over the coming months.