TORONTO, June 20, 2018 /CNW/ - Equitable Group Inc.
(TSX: EQB and EQB.PR.C) ("Equitable" or the "Company") today
announced that its wholly-owned subsidiary, Equitable Bank, has
reduced the size of its secured liquidity backstop facility to
$850 million from $2.0 billion, effective June 25, 2018, as a result of successful measures
taken to enhance its liquidity position and favourable funding
market conditions.
Over the past year, Equitable has taken several actions to
improve its already strong liquidity risk profile. Those
actions have included increasing the size of its liquid asset
portfolio, extending the average term of its Guaranteed Investment
Certificate ("GIC") book, enhancing the functionality and brand of
its EQ Bank platform, and reducing its exposure to more
volatile brokered High Interest Savings Accounts ("HISA"s).
"In light of strong, stable and growing demand for EQ
Bank savings products, including our recently launched GICs, as
well as other liquidity management activities over the past year,
our decision to reduce the backstop facility is well justified,"
said Andrew Moor, President and
Chief Executive Officer. "Assuming the broader funding market
continues to exhibit signs of stability over the next year, we will
also consider whether a backstop of any size is a necessary adjunct
to our operating model."
By reducing the size of the facility, Equitable will save
approximately $1.4 million
($0.06 of EPS) of pre-tax standby
fees each quarter through to the maturity of the backstop in June
2019. The Company will also write-down $5.8 million ($0.26
of EPS) of unamortized up-front costs associated with the
$1.15 billion reduction in the
current quarter. The write-down will then reduce pre-tax expenses
by $1.4 million ($0.06 of EPS) per quarter through to the end of
Q2 2019, relative to what would have otherwise been recorded. The
$2.8 million of total savings per
quarter and the $5.8 million
write-down will be reflected in the Company's Net Interest
Income.
The terms and conditions of the facility are otherwise
unchanged. Equitable has not drawn upon the facility and does not
anticipate using it prior to its expiry on June 18, 2019. The original facility was put in
place in June 2017 in response to
funding market disruption caused by a liquidity event at another
financial institution. We thank all of the banks in the
syndicate, which includes Bank of Montreal, CIBC, National
Bank, The Royal Bank of Canada, Scotiabank and The
Toronto-Dominion Bank for their ongoing support of Equitable.
ABOUT EQUITABLE GROUP INC.
Equitable Group Inc. is a growing Canadian financial services
business that operates through its wholly-owned subsidiary,
Equitable Bank. Equitable Bank, Canada's Challenger Bank™, is the country's
ninth largest independent Schedule I bank and offers a diverse
suite of residential lending, commercial lending and savings
solutions to Canadians. Through its proven branchless approach and
customer service focus, Equitable Bank has grown to over
$25 billion of Assets Under
Management. EQ Bank, the digital banking arm of Equitable
Bank, provides state-of-the-art digital banking services to more
than 60,000 Canadians. Equitable Bank employs more than 600
dedicated professionals across the country, and is a 2018 recipient
of Canada's Best Employer Platinum
Award, the highest bestowed by AON. For more information about
Equitable Bank and its products, please visit equitablebank.ca.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Statements made by the Company in this news release, in other
filings with Canadian securities regulators and in other
communications include forward-looking statements within the
meaning of applicable securities laws ("forward-looking
statements"). These statements include, but are not limited to,
statements about the Company's objectives, strategies and
initiatives, financial result expectations and other statements
made herein, whether with respect to the Company's businesses or
the Canadian economy. Generally, forward-looking statements can be
identified by the use of forward-looking terminology such as
"plans", "expects" or "does not expect", "is expected", "budget",
"scheduled", "planned", "estimates", "forecasts", "intends",
"anticipates" or "does not anticipate", or "believes", or
variations of such words and phrases which state that certain
actions, events or results "may", "could", "would", "might" or
"will be taken", "occur" or "be achieved". Forward-looking
statements are subject to known and unknown risks, uncertainties
and other factors that may cause the actual results, level of
activity, closing of transactions, performance or achievements of
the Company to be materially different from those expressed or
implied by such forward-looking statements, including but not
limited to risks related to capital markets and additional funding
requirements, fluctuating interest rates and general economic
conditions, legislative and regulatory developments, the nature of
our customers and rates of default, and competition as well as
those factors discussed under the heading "Risk Management" in the
Management's Discussion and Analysis and in the Company's documents
filed on SEDAR at www.sedar.com. All material assumptions used in
making forward-looking statements are based on management's
knowledge of current business conditions and expectations of future
business conditions and trends, including their knowledge of the
current credit, interest rate and liquidity conditions affecting
the Company and the Canadian economy. Although the Company believes
the assumptions used to make such statements are reasonable at this
time and has attempted to identify in its continuous disclosure
documents important factors that could cause actual results to
differ materially from those contained in forward-looking
statements, there may be other factors that cause results not to be
as anticipated, estimated or intended. Certain material assumptions
are applied by the Company in making forward-looking statements,
including without limitation, assumptions regarding its continued
ability to fund its mortgage business at current levels, a
continuation of the current level of economic uncertainty that
affects real estate market conditions, continued acceptance of its
products in the marketplace, as well as no material changes in its
operating cost structure and the current tax regime. There can be
no assurance that such statements will prove to be accurate, as
actual results and future events could differ materially from those
anticipated in such statements. Accordingly, readers should not
place undue reliance on forward-looking statements. The Company
does not undertake to update any forward-looking statements that
are contained herein, except in accordance with applicable
securities laws.
SOURCE Equitable Group Inc.