Canadian Western Bank’s expansion into Ontario focuses on wealth management for small business clients

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Canadian Western Bank’s first retail branch in Ontario can be found 30 kilometres west of Toronto’s downtown core, surrounded by warehouses and low-rise office buildings in an industrial business park.

While the out-of-the-way location in Mississauga may be an unglamorous choice for a launch into Ontario, it is part of a broader strategy by Canada’s eighth-largest domestic bank, which is aiming to quickly expand its wealth-management arm by catering to the kind of small business owners whose companies fill such suburban business centres.

Ontario is a key part of that growth strategy, which has already seen the bank’s wealth-management division increase its assets to more than $10-billion from $8.5-billion just a year ago. Canadian Western is on track to open a second location next year in Markham, Ont., and is scouting a third in the province.

Over its 37-year history, the Edmonton-based bank has expanded its operations across Canada and now has $36.6-billion in assets. It already had a large presence in Eastern Canada among its lending clients, including a large percentage of business owners who came to the bank for commercial loans and business banking.

But in recent years, its executives have sought to expand its smaller wealth-management division, which two years ago was still largely based in Alberta, with only $2-billion in assets. Over the past decade, Canadian banks have invested heavily in their wealth-management divisions, as more than $1-trillion in wealth has begun to move into the hands of younger generations.

“We always had the view that we were under-scale in wealth management and would need greater depth to have the prominence to give the boutique offering business owners need‚” Canadian Western Bank executive vice-president Stephen Murphy said in an interview.

In March, 2020, as COVID-19 began to shut down businesses across the country, the bank announced an $87-million deal to purchase two Toronto-based wealth-management companies – T.E. Wealth and Leon Frazer & Associates – from iA Financial Corp Inc.

The deal added $5.8-billion in assets under management and boosted the bank’s presence among business owners, particularly in Ontario and Quebec. The addition of T.E. Wealth advanced the bank’s planning capabilities in corporate financial education and executive financial counselling, while Leon Frazer expanded its asset-management capabilities in private wealth.

The wealth-management arm currently accounts for about 6 per cent of the bank’s total revenues, as of August, 2021. In order to increase that, Mr. Murphy has to compete with Canada’s Big Six banks.

Part of the strategy of getting more traction in Ontario is to leverage its existing operations in the province, where it already has almost a quarter of its loan portfolio in retail banking from referrals.

“The bank saw an opportunity to convert the largely lending-based clients into more full-service accounts – including wealth management,” Mr. Murphy said.

To do so, he says he needs to be “hyper-focused” on business owners, a segment that traditionally has found it difficult to navigate multiple banking relationships when trying to run a company.

Mr. Murphy, who spent the first 20 years of his career at a major Canadian bank, says he doesn’t want to simply replicate what the Big Six offer on a smaller scale.

“We are not trying to be a little big bank.

“We think there is a large segment of potential clients who are hungry for an alternative. And that is why we think we can go into Ontario, right into the big banks’ backyard, and take market share.”

Part of that starts with lending. Many business owners struggle to get commercial loans or financing, especially if their collateral lies in warehouse equipment or transportation fleets.

With a total of $5.3-billion in funds, CWB Equipment Financing provides asset-secured financing and leasing options to small businesses without having to pledge liquid assets on the balance sheet.

Another issue for business owners is getting access to financial planning when they don’t have a higher level of wealth, said Matt Evans, the president and CEO of wealth management at Canadian Western Bank.

“In wealth management, there is a tendency to say, ‘I care about you when you have a certain amount of money.’ But we have an opportunity to connect with business owners who we know are rich on paper, but they are not liquid,” Mr. Evans said. “We are trying to get to them earlier when we can see where they are heading, because that is when they really need the advice.”

At the Mississauga branch, clients can set up face-to-face appointment to bring together a number of their relationships – commercial and personal bankers, investment counsellors, financial planners, as well as experts from financing.

“That is our advantage relative to an organization that is very large and siloed,” Mr. Evans said. “We are trying to eliminate those silos and have the experts and knowledge all brought together into one relationship.”

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