After forming officially in 1996, the First Nations Bank of Canada (FNBC) has finally reached its ownership goal as of Nov. 1, 2009, by completing its share conversion with Toronto Dominion. Having reached an 80% share interest, the Aboriginal shareholders have taken control of the bank.
“It is one of these exciting things that you work on for a long time and then it happens and you enter the next stage. It is also an exciting time for all of our shareholders and the people who formed the bank, this is for sure,” said Keith Martell, FNBC’s newly appointed chairman and chief executive officer.
Martell explained that the FNBC was able to do so due to new capital that they were able to raise back in 2007 that reduced Toronto Dominion’s ownership to about 19.8%. This act served as a trigger that allowed the TD to finish with their financial obligations that they had originally entered into with the FNBC when they had agreed to help them start back in the ’90s. Despite this, Martell said that the bank has been very independent from TD in the last four to five years.
“This stage that we reached on Oct. 31, 2009 was really the final stage where TD’s obligations to help us get to that level is complete. The analogy that I used is that they were sort of like a big brother who had an obligation to be behind us and now we are on our own,” said Martell.
The TD bank will however remain a minority shareholder of the FNBC but with no obligation which puts the onus on the bank’s own management and the shareholders to take control. About 80% of the bank’s shareholders are Aboriginal groups from across Canada and the James Bay Crees are one of them.
Though the FNBC is a chartered bank and has all of the services, regulations and obligations of the other banks, what makes them different is their concentration on the unique needs of First Nations clientele. A great deal of where they do business is in the regions where the Aboriginal shareholders are located and this is because their perspective is that many First Nations clientele are underserved in Canada.
According to Martell, the FNBC understands its market and is interested in the development of the financial services in those markets and it has worked diligently at developing them. As First Nations clientele have their own money involved, they are part owners of this institution and they benefit in the long run from the participation in that market.
“Just like the James Bay Cree have a vested interest in Air Creebec because it serves their regions from the service point-of-view, they also own the company so part of that return does not just leave the region. It stays in their economy,” said Martel.
Rather than having the FNBC’s returns go to New York or Toronto, the funds have instead gone to help grow economies across Aboriginal Canada by ensuring that the services are tailored to the need of that market allowing the investors to participate as an owner.
The FNBC began as a concept in 1994 and evolved out of the Saskatchewan Indian Equity Foundation (SIEF) which is an Aboriginal capital corporation. They specialize in small loans, start-up operations and provided business support services. Recognizing that there were growing opportunities in the market and with the growth of capital funds in the communities, SIEF knew that there was a need for a chartered bank for First Nations groups.
They managed to form a strategic alliance with TD for the purposes of starting up the bank and formed a board of directors. In the process of looking to recruit Aboriginal people with the experience and the financial know-how, one of the people they came across was then Grand Chief Matthew Coon Come.
As it turned out, the Crees had been mulling over the idea of actually starting up something similar.
“I met with Coon Come and had a great discussion with him on the opportunities of the bank and through our talks I realized he knew a lot more about banking than most chiefs in Canada did, especially on the technical side of running the bank,” said Martell.
Coon Come served on the FNBC’s first board of directors until he left to become AFN National Grand Chief. Since then, Grand Council’s now Executive Director Bill Namagoose has been on the board.
“From the beginning we have had a relationship with the James Bay Cree and after we set up our first branch in Saskatoon in 1997, our second branch actually opened in Chisasibi in 1998. We have had the James Bay Cree on board as customers right from the beginning. They became shareholders in 2001 and increased their shareholding interest in 2007,” said Martell.