Vancity CU Shuts Down Online Lending
The $14.5 billion Vancity Credit Union said it has sold the majority of its retail loans offered through its online banking division after the service failed to take off.
Citizens Bank, Vancity's online banking subsidiary, will become a nondeposit-taking division focused on Visa credit card services and foreign exchange services for non-retail members, Canada's largest credit union said.
Vancity said it sold Citizens Bank's residential mortgages, personal loans and real estate secured lines of credit on Aug. 5 to Toronto-Dominion Bank for an undisclosed price. Citizens Bank's three boutique branches in Vancouver, Calgary and Toronto will close in December. Loans will continue to be serviced until a conversion is completed in early 2010. The online bank has 30,000 members.
"We pioneered online banking in Canada, but it's become a crowded marketplace," said Vancity President/CEO Tamara Vrooman. "In a national, online market, we were unable to achieve the scale necessary to succeed. Therefore, the bank's business model wasn't making full use of our strengths."
In late July, Vancity announced it would sell its insurance subsidiary to The Co-operators, a Canadian cooperative. Vancity Insurance Services Ltd. has 28,000 residential, 48,000 auto, 10,000 travel and 2,000 commercial insurance policies.