Monday, September 25, 2006

Dundee Bank of Canada Launched

Lynne Olver, Reuters, 25 September 2006

Dundee Bank of Canada, a recent entrant into the country's big-bank-dominated financial services sector, is betting that ageing Baby Boomers will opt for one-stop service through their financial advisors.

The tiny bank, formerly called Dundee Wealth Bank, got its charter from federal regulators a year ago and began limited operations in January this year.

After taking some time to build up technical capability, it launched a marketing campaign yesterday under the new Dundee Bank of Canada banner.

The first wave of the Boomers is hitting age 60, and they are looking for objective advisors to help make sense of their financial affairs, said Greg Reed, Dundee Bank president and chief executive.

"Our way to market is to make it very easy for those advisors to access initially our savings accounts, and our other products as they come along," Mr. Reed said in an interview.

Dundee Bank, which does not have any bricks-and-mortar branches, is hoping to acquire customers from the Big Six Canadian banks, as well as virtual banks such as ING Bank of Canada, he said.

"There are a number of people who switched into alternative banks to get higher rates than they were getting from traditional banks and were prepared to put up with having to do it on a computer or punch numbers on the phone, but they're now at the point where the novelty of that has worn off," Mr. Reed said.

Dundee Bank customers will be able to speak to their third-party financial advisors and move money in or out of their bank accounts in a day, Mr. Reed said. The bank offers two investment savings accounts: one pays 3.85% and the other, for clients who already pay fees to financial advisors, pays 4.10%. That is competitive with rates paid on some guaranteed investment certificates, Mr. Reed noted.

ING Bank of Canada, the unit of Dutch ING Groep ING.AS known locally as ING Direct, offers 3.5% interest on its investment savings account and 4.25% on one-year GICs. It has more than$14-billion in assets, according to its Canadian Web site.

Dundee Bank only has about $140-million in deposits and $90-million in residential mortgages, the latter primarily offered through mortgage brokers. But it plans to eventually offer loans, personal lines of credit, credit cards and debit cards.

Mr. Reed declined to reveal specific targets for customer or asset growth.

The bank is a unit of Dundee Wealth Management Inc., which manages or administers about $50-billion in assets through various subsidiaries.

The Canadian market has seen many niche banks emerge in the past decade, including banks set up by retailers, credit card issuers and credit unions.

Earlier this month, insurance giant Manulife Financial Corp. said assets managed by its Waterloo, Ont.-based Manulife Bank had grown to more than $7-billion, good enough for eighth spot in the domestic bank rankings, ahead of Edmonton-based Canadian Western Bank , which had $6.9-billion in assets at the end of July.