NTI, Atuqtuarvik get go-ahead for bank development

GREG YOUNGER-LEWIS

Residents of Nunavut’s smaller communities can expect help with saving money and getting loans in the next year, if all goes smoothly with Inuit leaders’ plans to create a home-grown bank or credit union.
Small communities outside Nunavut’s three regional centres emerged as the immediate winner in the banking debate at Nunavut Tunngavik Inc.’s annual general meeting last week.

As expected, delegates stopped short of pushing for a full-fledged stand-alone bank, for now.

Instead, they focused on the short-term, giving the go-ahead to NTI and its lending arm, Atuqtuarvik Corp., to bring basic financial services to the communities as soon as possible.

To do this, NTI and Atuqtuarvik Corp. plan to team with a southern-based bank or credit union.

The step-by-step approach reflected warnings from staff that trying to build an independent bank or credit union for the territory too quickly could be a burden on beneficiaries in the future.

“We don’t want to. . . rush into something,” Ashley Sinclair, NTI’s director of finance, said during the meeting in Rankin Inlet. “It may put NTI in a position where it has to bail something out.

“We want to think this through very carefully.”

A consultant hired to study banking options for Nunavut told delegates that it would be at least two years before NTI could set up a small bank, trust company or credit union.

Robert Trudeau, president of RT Associates, estimated it would take $4 million to get a Nunavut bank up and running. After that, they risk losing more than $1.8 million a year, if they try to set up a stand-alone bank right away.

The loss comes mainly from the high cost of training, and having to compete with other banks for a potential deposit base of just $300 million in the territory. Trudeau calculated that a new bank or credit union would have to capture at least half of the banking market just to break even.

Instead, NTI delegates went with Trudeau’s recommendation to focus on joining forces with a non-financial group, like Arctic Cooperatives Ltd. or the Northwest Company, and a southern-based financial institution, like the Royal Bank or CIBC, in order to help the 22 Nunavut communities that have little, if any, financial services.

NTI hasn’t chosen other partners in the plan, but many groups are showing interest, Trudeau said.

The short-term plan aims to give residents in smaller communities several services, including:

getting banking advice in Inuktitut, or Innuiaqtun;
getting a loan;
using a debit card bank machine to make deposits and withdrawals;
and cashing a cheque, or paying bills.
The short-term project will cost less than creating a stand-alone bank because it will require the partner groups to pay for training.

Trudeau and NTI staff declined to say exactly how much the project would cost, but any spending will have to be approved by the NTI board of directors.

During a presentation about banking, Atuqtuarvik president Ken Toner stressed that the banking project would not look to “drive out” banks already working in Nunavut.

“We’re trying to work with them, not against them,” Toner said.

NTI advisors have not decided on whether a credit union, trust company, or bank would be best for Nunavut in the long term, but predict that it would likely be a mix of the various models.

NTI president Paul Kaludjak said bringing financial services to the communities will ultimately help residents and the overall economy.

“When you go to the communities, their level of [financial] service is pitiful,” he said in a recent interview. “They need help.

“We’re trying to cater to their needs and try to improve their living conditions.”

Atuqtuarvik estimates that NTI has spent $200,000 on researching how to establish a new bank in Nunavut since the organization was asked to do a study at last year’s annual general meeting in Sanikiluaq.