ATB Financial is a

financial institution A financial institution, sometimes called a banking institution, is a business entity that provides service as an intermediary for different types of financial monetary transactions. Broadly speaking, there are three major types of financial ins ...

and

Crown corporation Crown corporation () is the term used in Canada for organizations that are structured like private companies, but are directly and wholly owned by the government. Crown corporations have a long-standing presence in the country, and have a sign ...

wholly owned by the province of

Alberta Alberta is a Provinces and territories of Canada, province in Canada. It is a part of Western Canada and is one of the three Canadian Prairies, prairie provinces. Alberta is bordered by British Columbia to its west, Saskatchewan to its east, t ...

, the only province in

Canada Canada is a country in North America. Its Provinces and territories of Canada, ten provinces and three territories extend from the Atlantic Ocean to the Pacific Ocean and northward into the Arctic Ocean, making it the world's List of coun ...

with such a financial institution under its exclusive ownership. Originally established as Alberta Treasury Branches in 1938, ATB Financial operates only in Alberta and provides financial services to over 800,000 Albertan residents and businesses. It is the largest

public bank A public bank is a bank, a financial institution, in which a State (polity), state, municipality, or public actors are the owners. It is an enterprise under government control.

in North America and Alberta’s largest financial institution based in the province. Headquartered in

Edmonton Edmonton is the capital city of the Provinces and territories of Canada, Canadian province of Alberta. It is situated on the North Saskatchewan River and is the centre of the Edmonton Metropolitan Region, which is surrounded by Central Alberta ...

, ATB Financial has over 5000 employees. ATB is not a chartered bank, meaning it is not regulated by the Canadian federal government under the '' Bank Act'' and associated regulations. ATB is instead regulated entirely by the Government of Alberta under the authority of the ''ATB Financial Act'' and associated regulations; the legislation is modeled on the statutes, regulations, and guidelines which govern banks and other federally chartered financial institutions. ATB is not a member of the

Canada Deposit Insurance Corporation The Canada Deposit Insurance Corporation (CDIC; ) is a Canadian federal Crown Corporation created by Parliament in 1967 to provide deposit insurance to depositors in Canadian commercial banks and savings institutions. CDIC insures Canadians' de ...

or Alberta's provincial Credit Union Deposit Guarantee Corporation; deposits are instead fully guaranteed by the Government of Alberta itself. ATB Financial was one of fifteen financial institutions that participated in Canada's Large Value Transfer System.

History

Background

The Alberta Treasury Branches were created by the

Social Credit Social credit is a distributive philosophy of political economy developed in the 1920s and 1930s by C. H. Douglas. Douglas attributed economic downturns to discrepancies between the cost of goods and the compensation of the workers who made t ...

government of Premier

William Aberhart William Aberhart (December 30, 1878 – May 23, 1943), also known as "Bible Bill" for his radio sermons about the Bible, was a Canadian politician and the seventh premier of Alberta from 1935 to his death in 1943. He was the founder and first le ...

in 1938, with its roots dating back to political unrest in 1917 arising from the unmet credit demands of the

West West is one of the four cardinal directions or points of the compass. It is the opposite direction from east and is the direction in which the Sun sets on the Earth. Etymology The word "west" is a Germanic word passed into some Romance langu ...

. Prior to ATB Financial's formation, Aberhart and Social Credit swept into power in the 1935 Alberta election in a wave of unrest following

scandals A scandal can be broadly defined as the strong social reactions of outrage, anger, or surprise, when accusations or rumours circulate or appear for some reason, regarding a person or persons who are perceived to have transgressed in some way a ...

surrounding the United Farmers Premier John Edward Brownlee. Aberhart's government sought radical monetary reform in a province which was devastated by the

Great Depression The Great Depression was a severe global economic downturn from 1929 to 1939. The period was characterized by high rates of unemployment and poverty, drastic reductions in industrial production and international trade, and widespread bank and ...

, as well as greater economic autonomy from both the federal government and financial institutions based largely in Toronto and Montréal. However, in two years Aberhart's government failed to bring forward promised reforms, which resulted in a backbencher revolt forcing the government to pass three pieces of controversial financial reform acts. ''Credit of Alberta Regulation Act'' required all bankers to obtain a licence from the Social Credit Commission, ''Bank Employees Civil Rights Act'' prevented unlicensed banks and their employees from initiating civil actions, and ''Judicature Act Amendment Act'' prevented any person from challenging the constitutionality of Alberta's laws in court without receiving the approval of the Lieutenant-Governor in Council. In August 1937, the federal government disallowed all three acts. The

Supreme Court of Canada The Supreme Court of Canada (SCC; , ) is the highest court in the judicial system of Canada. It comprises nine justices, whose decisions are the ultimate application of Canadian law, and grants permission to between 40 and 75 litigants eac ...

, in answering

reference question In law of Canada, Canadian law, a reference question or reference case (formally called abstract review) is a submission by the Canadian government, federal or a Provinces and territories of Canada, provincial government to the courts asking for a ...

s posed by the federal government, unanimously ruled that such disallowance was valid. Aberhart returned with three new bills, ''Bank Taxation Act'' (Bill 1) levying provincial taxes on banks' paid-up capital and reserve funds at punitive rates, ''Credit of Alberta Regulation Act, 1937'' (Bill 8) similar to the previous disallowed act, but covering all "credit institutions", and '' Accurate News and Information Act'' (Bill 9) requiring newspapers to print "clarifications" of stories considered inaccurate by the Social Credit Board, and to reveal their sources on demand, and also authorizing the provincial government to prohibit the publication of any newspaper, any article by a given writer, or any article making use of a given source. All three bills were

reserved Reserved is a Polish apparel retailer headquartered in Gdańsk, Poland. It was founded in 1999 and remains the flagship brand of the LPP (company), LPP group, which has more than 2,200 retail stores located in over 38 countries and also owns su ...

by Lieutenant Governor John C. Bowen, and the federal government posed the

s to the Supreme Court. In ''

Reference Re Alberta Statutes ''Reference Re Alberta Statutes'', also known as the Alberta Press case and the Alberta Press Act Reference, is a landmark reference question, reference of the Supreme Court of Canada where several provincial laws, including one restricting the pr ...

'' the Supreme Court ruled all three bills as ''

ultra vires ('beyond the powers') is a Latin phrase used in law to describe an act that requires legal authority but is done without it. Its opposite, an act done under proper authority, is ('within the powers'). Acts that are may equivalently be termed ...

''.

Formation

Aberhart sought to create a State Credit House which facilitated some banking services in small communities where larger banks had previously closed. Subsequently, the Aberhart government created the Alberta Treasury Branches through a series of Orders in Council in late-August and early-September 1938, following the judicial defeat of the Social Credit monetary reforms at the Supreme Court. The Aberhart government authorized the Treasury Department to establish "branches of the provincial treasury" and with $200,000 of provincial funds as capital the first Alberta Treasury Branch was opened in

Rocky Mountain House Rocky Mountain House is a town in west-central Alberta, Canada. It is approximately west of Red Deer at the confluence of the Clearwater and North Saskatchewan Rivers, and at the crossroads of Highway 22 (Cowboy Trail) and Highway 11 (David ...

on September 29, 1938, followed by branches in

Andrew Andrew is the English form of the given name, common in many countries. The word is derived from the , ''Andreas'', itself related to ''aner/andros'', "man" (as opposed to "woman"), thus meaning "manly" and, as consequence, "brave", "strong", "c ...

Grande Prairie Grande Prairie is a city in Northern Alberta, northwestern Alberta, Canada, within the southern portion of an area known as Peace River Country. It is located at the intersection of Alberta Highway 43, Highway 43 (part of the CANAMEX Corridor) ...

, Killam, and St. Paul which opened the next day. The first employees of the Treasury Branches were provincial civil servants with previous banking experience, many of whom were transferred from the Treasury Department's Sales Tax Branch following the abolishment of the provincial sales tax. Besides banking, the Treasury Branches served as government offices and propaganda centres. The Aberhart government was able to utilize the Treasury Branches to operate the "Interim Program", which was an attempt to provide the

citizen's dividend Citizen's dividend is a proposed policy based upon the Georgist principle that the natural world is the Commons, common property of all people. It is proposed that all citizens receive regular payments (dividends) from revenue raised by leasin ...

promised by the Social Credit government in 1935. The Interim Program's name indicated the temporary nature of the program, which would remain in place until a complete system of Social Credit could be established in Alberta. Under the interim program, the Treasury Branches issued non-negotiable transfer vouchers in place of regular

currency A currency is a standardization of money in any form, in use or circulation as a medium of exchange, for example banknotes and coins. A more general definition is that a currency is a ''system of money'' in common use within a specific envi ...

that could be redeemed at participating merchants in the province. Consumers who purchased goods from participating merchants that were partially produced in Alberta would earn a "bonus" in their account of up to three per cent, the full bonus (in the form of transfer vouchers) being earned if one-third of a consumers aggregate monthly purchases were "Alberta-made". The one-third Alberta-made program was generally ineffective in increasing domestic market demand as it was easy for consumers to meet the low threshold over the period of one month. In response, the threshold on Alberta-made products was raised to one-half in February 1941. Transfer vouchers could also be used for payments to the provincial government, including taxes, licence fees, and other provincial debts. The transfer voucher system worked considerably better than the previous attempt to issue a citizen's dividend in the form of prosperity certificates in 1936. The Treasury Branches proved popular amongst Albertans, resulting in the government establishing 22 branches and 270 branch agencies by June 1939. The Treasury Branches were first authorized to provide loans in 1941 to be approved under a centralized "loan committee" overseen by the Treasury Branches Superintendent. Expanding into lending services was necessary to gain a stronger presence in retail areas, as many merchants who operate with the Treasury Branches also maintained a separate account at another bank to ensure access to credit. The only services provided up to 1943 were term

savings account A savings account is a bank account at a retail banking, retail bank. Common features include a limited number of withdrawals, a lack of cheque and linked debit card facilities, limited transfer options and the inability to be overdrawn. Traditi ...

s at 1.5 to 3 per cent interest, and the sale of automobile, hunting and fishing licences. Furthermore, the government charged consumers a two per cent penalty on cash withdrawals to continue to incentivize Albertans to use non-negotiable transfer vouchers to ensure capital did not flow out of the branches. Merchants were provided a means to withdraw a certain amount of cash without being charged a penalty in order to replace goods sold for vouchers. A formula was developed to determine the "basic rate", the amount of cash the merchant could withdraw without penalty by taking the merchant's annual profit margin as a percentage and subtracting it from 100 per cent (i.e. 10% margin less 100% means 90% of the balance is available to be withdrawn without penalty). The calculation basic rate system was deemed cumbersome and replaced in February 1941 with a centralized list compiled by the Department of Industries and Labour, based on the type of products and services sold and the location of the business. By early 1942 there were over 7,125 merchants enrolled under the interim program. Government employees were partially paid with Treasury Branch vouchers, with single employees, widows and widowers receiving 15 per cent of their salary in voucher form. Married employees were paid between 15 and 25 per cent of their salary in vouchers, and the calculation was made after all deductions. This policy encouraged employees to use the service instead of other banks. The bonus system ceased in April 1945 and a contingency of $480,738 was paid out of the province's general revenue fund to a reserve fund for the purpose of covering the cumulative earned bonuses during the program. The Treasury Branches proved to be successful as deposits grew to $24-million by 1946, and by 1950 there were 45 Treasury Branches, six sub-branches, and 110 agencies employing 331 staff.

Changes in 1950s and 1960s

During the 1955 Alberta election the Treasury Branches came under scrutiny for allegations of preferential treatment for loans to members of the Legislative Assembly (MLAs), as well as preferential contracts awarded to firms indebted to the provincial government. The Treasury Branches provided significant loans to a handful of road construction companies, with the firm Sparling-Davis provided $4.5-million in loans, which was more than 20 per cent of the Treasury Branches overall loans. Premier Ernest Manning reluctantly approved a Royal Commission to look into the lending practices of the Treasury Branches the day before the 1955 election, the commission was led by

Hugh John Macdonald Sir Hugh John Macdonald, (March 13, 1850 – March 29, 1929) was the only surviving son of the first prime minister of Canada, John A. Macdonald. He too was a politician, serving as a member of the House of Commons of Canada and a federal cabi ...

and James Mahaffy. The commission was provided with narrow terms of reference and found there was no evidence of maladministration or wrongdoing by the government or the Treasury Branches. Prior to the formation of the commission the government responded to the allegations by introducing a bill in 1955 which prevented MLAs from borrowing from the Treasury Branches. The 1967 Royal Commission on Banking and Finance led by Justice Dana Porter recommended that a deposit insurance scheme be implemented for Canadian banks. Subsequently, in 1969 the 16th Alberta Legislature passed ''The Treasury Branch Deposits Guarantee Act'' which provided a provincial guarantee for the deposits of the Treasury Branches.

Oil and gas boom and bust

The Alberta economy grew significantly in the 1970s and early 1980s due to the rising price of oil. Total loans issued by the Treasury Branches grew from $10.6-million in 1950 to $1.9-billion by 1981. However, despite significant growth, prosperity would not last forever. All Alberta industries suffered in the early 1980s owing to high interest rates, low world commodity prices, and the

National Energy Program The National Energy Program (, NEP) was an energy policy of the Canadian federal government from 1980 to 1985. The economically nationalist policy sought to secure Canadian energy independence, though was strongly opposed by the private sector an ...

. The Treasury Branches were no exception, posting the first of six consecutive years of losses in 1983. Other regional financial institutions suffered at this time with the collapse of the Canadian Commercial Bank and the Northland Bank in 1985. By 1989 the Treasury Branches had an accumulated deficit of CA$150 million. ATB was the subject of scandal in the late 1980s after clients such as Peter Pocklington's Gainers Foods and the Ghermezian Brothers'

West Edmonton Mall West Edmonton Mall (WEM) is a large shopping mall in Edmonton, Alberta, Canada, that is owned, managed, and operated by Triple Five Group. It is the second most visited mall in Canada, after the Toronto Eaton Centre in Toronto, followed by Met ...

defaulted on loans. The Treasury Branches did begin to innovate in the early 1980s as well, joining the Canadian Payments Association in 1983 allowed the institution to clear cheques, and the Branches developed an interest rate shielding policy for agricultural customers and delivered special payments on behalf of the government's residential mortgage loan program. In 1984 the Treasury Branches offered US dollar savings accounts in partnership with

Citibank Citibank, N.A. ("N. A." stands for "National bank (United States), National Association"; stylized as citibank) is the primary U.S. banking subsidiary of Citigroup, a financial services multinational corporation, multinational corporation. Ci ...

Automated teller machine An automated teller machine (ATM) is an electronic telecommunications device that enables customers of financial institutions to perform financial transactions, such as cash withdrawals, deposits, funds transfers, balance inquiries or account ...

s were introduced in 1989 and in 1990 the Treasury Branches became the first Canadian financial institution to offer telephone banking services.

1990s

In the 1990s, the government reformed Alberta Treasury Branches with the intention of transforming it into a financial institution that could compete with Canadian chartered banks. Public trust was eroded during the 1980s and 1990s as high-risk loans with political motivations eroded the Treasury Branches financial footing, including a $100-million loss in 1996. By 1994, there were 142 Treasury Branches, 125 agencies, 3,000 staff and 80 automated teller machines in Alberta. The Klein government appointed Gordon Flynn to review the Treasury Branches operations, Flynn recommended a number of changes including greater autonomy, financial accountability measures and the appointment of a

Board of Directors A board of directors is a governing body that supervises the activities of a business, a nonprofit organization, or a government agency. The powers, duties, and responsibilities of a board of directors are determined by government regulatio ...

. Flynn's recommendations were reviewed by a working group chaired by former federal finance minister Don Mazankowski, which provided nine further recommendations for the operations of ATB. Mazankowski recommended the government articulate the public policy goals and benchmarks for the institution, ATB must operate at an arms-length from the government, operate under a board of directors, be provided equal treatment against other

private sector The private sector is the part of the economy which is owned by private groups, usually as a means of establishment for profit or non profit, rather than being owned by the government. Employment The private sector employs most of the workfo ...

banks, modernized to allow ATB to compete with modern banks, offer new and in demand financial services and products, deliver programs with a for profit emphasis, remain cost conscious and profit motivated, and be subject to an accountability regime similar to the private sector. Provincial Treasurer Jim Dinning quickly introduced legislation to create an independent

board of directors A board of directors is a governing body that supervises the activities of a business, a nonprofit organization, or a government agency. The powers, duties, and responsibilities of a board of directors are determined by government regulatio ...

made up of government appointees was established in 1996 and ATB formally became an autonomous provincial

on October 8, 1997. The government also appointed former Metropolitan Life CEO Paul Haggis as the new superintendent of ATB in 1996.

2000s to present

The Alberta Treasury Branches rebranded in January 2002 as ''ATB Financial'' in an effort to gain stronger brand recognition in urban areas such as Calgary and Edmonton. By 2002 ATB Financial controlled 15 per cent of the province's retail banking, but lagged in the cities with seven per cent in Calgary and eight per cent in Edmonton. The official change of name for the crown corporation did not occur until 2017. ATB was not immune to the

2008 financial crisis The 2008 financial crisis, also known as the global financial crisis (GFC), was a major worldwide financial crisis centered in the United States. The causes of the 2008 crisis included excessive speculation on housing values by both homeowners ...

, when over $1.2-billion of non-bank sponsored asset-backed commercial paper became illiquid. The financial crisis resulted in special provisions for credit loss of $253-million and $225-million in 2008 and 2009. Alberta's Auditor-General noted that inappropriate incentives may have been to blame for insufficient due diligence on for the losing securities. The Progressive Conservative government responded in July 2009 when Finance Minister Iris Evans announced a number of government programs to strengthen ATB's balance sheet including providing $600-million in notational capital, and changes to requirements for capital adequacy test. In 2015, the New Democratic government capitalized ATB Financial with an additional $1.5-billion to promote lending access to small and medium-sized businesses. In 2021 ''

Fast Company ''Fast Company'' is an American business magazine published monthly in print and online, focusing on technology, business, and design. It releases six print issues annually. History ''Fast Company'' was founded in November 1995 by Alan Webb ...

'' named ATB Financial one its 100 Best Workplaces for Innovators in the International category. Based in Calgary, it had a three-year-old incubator, ATB Ventures.

Controversies

West Edmonton Mall scandal

In 1998 ATB filed a lawsuit against the former acting superintendent of the bank and the Ghermezian family alleging the family bribed the official to issue a commercially unreasonable

loan guarantee A loan guarantee, in finance, is a promise by one party (the guarantor) to assume the debt obligation of a borrower if that borrower defaults. A guarantee can be limited or unlimited, making the guarantor liable for only a portion or all of the ...

for

. The $65-million, 30-year loan in question was issued at no interest, and fully guaranteed a $353.5-million loan provided by Toronto Dominion Bank, both occurring on October 31, 1994. The loan agreement also provided unusual concessions such as allowing dividends to continue to be paid, prevents ATB from initiating foreclosure proceedings for 20 years and included a lease that allowed the Ghermezian family the right to manage the mall for 99 years. The former superintendent claimed the financing occurred on the orders of Premier

Ralph Klein Ralph Philip Klein (November 1, 1942 – March 29, 2013) was a Canadian politician and journalist who served as the 12th premier of Alberta and leader of the Progressive Conservative Association of Alberta from 1992 until his retirement in 2 ...

and other provincial politicians, although a probe by the auditor general found no evidence of government direction. The lawsuit was settled in December 2002, with details of the settlement remaining private.

Privatization

Throughout its history ATB Financial has remained a prominent candidate for proponents of

privatization Privatization (rendered privatisation in British English) can mean several different things, most commonly referring to moving something from the public sector into the private sector. It is also sometimes used as a synonym for deregulation w ...

in Alberta. Under Premier

the Government of Alberta moved to privatize government corporations and services. The Klein mantra of "getting government out of the business of business" applied to several government owned businesses that competed against similar private companies. ATB as a financial institution competed against chartered banks and credit unions, making it prime target for privatization. The government review led by Gordon Flynn recommended privatization; however, support from the Progressive Conservative rural caucus, and the ongoing and high-profile West Edmonton Mall lawsuit in the late 1990s created significant uncertainty for the value of ATB, scuttling any plans for privatization. In its 2018 report, the Parkland Institute argued against privatization of ATB Financial noting the policy implications available to the Government of Alberta through a fully government controlled financial institution. The Parkland Institute argued ATB could be used to provide low cost financing to Albertans, financing social housing, financing climate change goals, purchasing government debt and providing for agricultural growth. The Parkland Institute further argues against privatization due to the vast network of rural and remote branches ATB operates, which would not be financially viable for a traditional bank without a similar mandate. In March 2019, Finance Minister Joe Ceci revealed the Government of Alberta had received a detailed offer from

Scotiabank The Bank of Nova Scotia (), operating as Scotiabank (), is a Canadian multinational corporation, multinational banking and financial services company headquartered in Toronto, Ontario. One of Canada's Big Five (banks), Big Five banks, it is the ...

to purchase ATB Financial; however, the amount offered to privatize ATB was not provided by Ceci.

Financials

As of May 24, 2018, ATB reported

asset In financial accounting, an asset is any resource owned or controlled by a business or an economic entity. It is anything (tangible or intangible) that can be used to produce positive economic value. Assets represent value of ownership that can b ...

s of $51.9 billion,

deposits A deposit account is a bank account maintained by a financial institution in which a customer can deposit and withdraw money. Deposit accounts can be savings accounts, current accounts or any of several other types of accounts explained below. ...

of $32.7 billion,

loan In finance, a loan is the tender of money by one party to another with an agreement to pay it back. The recipient, or borrower, incurs a debt and is usually required to pay interest for the use of the money. The document evidencing the deb ...

s of $44.1 billion, and a

net income In business and Accountancy, accounting, net income (also total comprehensive income, net earnings, net profit, bottom line, sales profit, or credit sales) is an entity's income minus cost of goods sold, expenses, depreciation and Amortization (a ...

of $274.6 million.

Awards

*In 2017, ATB Financial was named second best workplace in all of Canada by Great Place to Work. *In 2015, ATB Financial was named one of Alberta's Top Employers by Mediacorp Canada Inc. *Ranked 4 of Canada's Top 50 Best Workplaces, Large and Multinational in 2016. *Received two governance awards from the Canadian Society of Corporate Secretaries in 2014. *Awarded Outstanding Corporation award in the Edmonton Philanthropy Day celebrations. *ATB Financial won the People's Choice Award for Alberta BoostR at the 2014 North America Corporate Entrepreneur Awards

Memberships

* Alberta Regional Network (ARN) * Canadian Payments Association * Cirrus (interbank network) *

Interac Interac is a Canadian interbank network that links financial institutions and other enterprises for the purpose of exchanging electronic financial transactions. Interac serves as the Canadian debit card system and the predominant funds transf ...

* MasterCard Canada *

NYCE The New York Currency Exchange (NYCE) is an interbank network connecting the Automatic teller machine, ATMs of various financial institutions in the United States and Canada. NYCE also serves as an EFTPOS network for NYCE-linked ATM cards. NYCE ...

Visa Inc Visa Inc. () is an American multinational payment card services corporation headquartered in San Francisco, California. It facilitates electronic funds transfers throughout the world, most commonly through Visa-branded credit cards, debit c ...

References

Bibliography

* * * * *

External links

* {{Authority control Banks of Canada Crown corporations of Alberta Banks established in 1938 Financial services companies based in Alberta Companies based in Edmonton 1938 establishments in Alberta Government-owned banks of Canada Government-owned banks