Aboriginal financial institution will also open three agency branches in communities

The First Nations Bank of Canada plans to open a full-service branch in Iqaluit by November 2009, and three agency branches in other Nunavut communities over the next three years.

The expansion of the chartered bank into Nunavut is part of a deal, signed Oct. 29, that saw Atuqtuarvik Corp. purchase 20 per cent of the bank's shares.

The deal makes Atuqtuarvik the second-largest investor in the bank, which has branches across the country, and specializes in providing banking services in small aboriginal communities.

The First Nations Bank is affiliated with the Toronto-Dominion Bank, and offers access to a range of TD Bank services.

No decision has been made about where the three agency branches will go, but Ken Toner, president and CEO of Atuqtuarvik, said that Baker Lake and Pond Inlet "seem to be the obvious choices up front," because of mining activity near these communities.

And, unlike Cambridge Bay or Rankin Inlet, these communities have no banks. Atuqtuarvik made the deal primarily to bring banking services to Nunavut communities where none exist, Toner said.

But the bank will also need to establish a full-service branch in Iqaluit, Toner said, in order to compete for lucrative government business.

The final decision of where the agency branches will be placed in Nunavut is up to the bank's board of directors. A market study will be conducted before then.

But the chair of the bank has already visited Baker Lake last month, Toner said, so "the process is already underway."

Toner made the comments during Nunavut Tunngavik Inc.'s annual general meeting in Rankin Inlet last week. NTI and the Nunavut Trust created Atuqtuarvik as an investment company that loans money to Inuit-owned businesses.

If the scandal-ridden Nunavut Business Credit Corp. is a cautionary tale of how not to lend money to Nunavut businesses, Atuqtuarvik appears to be an example of how to do this correctly.

"We will support any business that makes sense," said Toner. "We lend to viable Inuit-owned businesses."

Atuqtuarvik earned more than $1.5 million in interest from loans in 2007, allowing the organization to end the fiscal year with a profit of slightly more than $600,000.

It gave out $1.3 million in loans over that period, and purchased $300,000 in shares in Inuit companies in 2007. Atuqtuarvik has 38 clients.

When businesses fail to repay loans, Atuqtuarvik has taken a different approach than credit corporations funded by the Government of Nunavut, which have at times spent a lot of money suing beneficiaries who are broke.

One client of Atuqtuarvik, who ran a bed and breakfast in Pond Inlet, was forced to close this year. The owners were unable to sell the business, and unable to pay back their loan.

Toner said Atuqtuarvik "saved thousands of dollars in legal fees" by repossessing the home, valued at $240,000, rather than suing the owners. The corporation is now in talks with a mining company to rent the home.

Another business, in "the food sector," also failed, and ended up owing Atuqtuarvik $250,000.

"They didn't fail because it wasn't a good business," Toner said. "They failed because they couldn't find employees."

After working many consecutive 18-hour days, Toner said the owners "basically dropped of fatigue."

Atuqtuarvik could have repossessed the owners' home. Instead, they wrote off the debt, because, Toner said, "they tried."

But some NTI meeting-goers complained Atuqtuarvik made it too difficult for beneficiaries to get money.

Thomasie Alikatuktuk, president of the Qikiqtani Inuit Association, asked why it was so hard to get a loan.

John Hickes, Atuqtuarvik's chair, said it's up to the client to demonstrate they are able to repay the loan, with interest.

"If you want to see some bad-case scenarios, just look at the NBCC," Hickes said.

What makes Atuqtuarvik different from a bank, Hickes said, is that "we know how to access funds," on behalf of clients, from different organizations that give money to Inuit.

Joshua Kangok, chair of Iqaluit's Amarok Hunters and Trappers Organization, asked why his HTO was turned down for a loan. They approached Atuqtuarvik after they ran out of money mid-way through the construction of a new building, which remains unfinished.

Toner replied that when Atuqtuarvik was approached by the HTO two years ago, "there were some problems with the analysis. Some of the numbers didn't work out."

Employee turnover within the HTO meant that when Atuqtuarvik approached them months later, they were dealing with new people.

"We went back several times. The last time we did, we were told the money wasn't needed any more."