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Aboriginal-owned bank in works

Winnipeg group partnering with U.S., New Zealand tribes

By: Martin Cash

Friday, Jul. 20, 2012 at 8:14 AM | Comments: 0

WAYNE GLOWACKI / WINNIPEG FREE PRESS archives Alan Park, CEO of TWCC

A Winnipeg aboriginal financial institution, Tribal Wi-Chi-Way-Win Capital Corp., is spearheading an effort to start a new aboriginal-owned chartered bank in Canada -- with investment from indigenous peoples from New Zealand and the United States.

A memorandum of understanding was signed in Winnipeg on Thursday between TWCC, a Maori trust from New Zealand and NativeOne Institutional Trading, LLC, a native-owned brokerage firm based in New York, to pursue a range of native economic empowerment projects, including a bank.

Alan Park, TWCC's chief executive officer, said the idea of getting an aboriginal partnership together to form a bank has been coming for some time.

"We have operated a successful lending operation in this environment for 20 years and we have diversified to other lending products and have done that successfully," Park said. "We're taking it to the next level."

Park said the idea is for initial capitalization to be about $25 million, allowing the bank to lend about seven times that amount until after a proven track record is established.

TWCC would be the major shareholder and is driving the project. Other Canadian aboriginal institutions will be invited to invest in the enterprise.

It will operate a full suite of banking services -- deposit-taking, mortgage, business and personal loans and wealth management.

"It is all about keeping the money in the community," said Park. "All our bands have money deposited in the big five banks earning fees and interest for the banks' shareholders. There's no reason we can't do that ourselves and keep it in the community."

He said the plan is to have an application to the office of the superintendent of financial institutions by next March. Typically, it takes about 18 months for such an application to be vetted.

"This is not something we just thought up last week," he said. "We have a business plan in place and a team of banking industry experts from Toronto working with us."

TWCC has made about $40 million in development loans to aboriginal businesses since 1993. In the last few years, it has branched off into other businesses including Aski Financial, which offers employer-benefit lending as an alternative to payday loans.

Park said he believes there is growing demand from the aboriginal community for greater diversity in banking services.

"We have had clients come through these doors with business propositions that are entirely bankable as far as we are concerned, but they cannot get a lender," he said.

Te Taru White, spokesman for a $160-million Maori trust, said a banking operation owned by an international aboriginal partnership may be the first such enterprise in the world.

Asked why the New Zealand Maori would be motivated to invest in a Canadian aboriginal bank, White said, "First and foremost we have very similar cultural values, similar history and similar aspirations. Also, we are inter-generational in our thinking. We see strong synergies in our ability to do business together."

The as-yet-unnamed bank would be based on reserve or urban reserve land, allowing interest earned by First Nations individuals or organizations to be tax free.

Part of Park's interest in advancing an aboriginal-owned bank is his contention the aboriginal community is not well-served by mainstream banks.

"Every (mainstream) bank has an aboriginal banking program, but they just don't seem to be able to get the service the way it could be when dealing with a demographic that's grown by 46 per cent over the past 10 years," he said. "I'm not criticizing anybody, but they just can't do it. I like to think we have the secret sauce."

Me-Dian Credit Union, Peace Hills Trust and First Nations Bank are all Canadian financial institutions at least partly owned by aboriginal investors.

In addition to its lending business, TWCC operates a 130-seat customer contact centre, TWCC Insurance Partners Inc., which delivers pension benefits as well as property and casualty insurance.

martin.cash@freepress.mb.ca

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