Lévis (Qc), November 5, 2018 - Zag Bank announced today it will begin winding down its operations with a target of the second quarter of 2019 for closure. This is the result of a strategic decision taken by the Bank's shareholder, Desjardins Group.
"Being a part of Desjardins Group means that Zag Bank has always been supported by Canada's largest co-operative financial group, which has one of the highest capital ratios and credit ratings in the industry. As it commences the wind down, the Group will continue to support and maintain the Bank's obligations towards its depositors, clients and employees", said David Raju, President and CEO of Zag Bank.
Depositor funds and accrued interest are entirely safe, backed by Zag Bank and Desjardins:
- Clients can withdraw the funds in their high interest savings accounts if they choose, but the Bank will not be opening any new accounts or accepting new deposits as of November 5, 2018. On December 1, 2018, remaining deposits in high interest savings accounts will be returned to clients who haven't already withdrawn their funds.
- Clients with Guaranteed Investment Certificates (GICs) will be able to terminate their investments early with no penalties. Interest accrued will be paid in full.
- Clients with registered investments (TFSAs, RRSPs) will be able to easily transfer their investments into a registered investment at another financial institution of their choice. Zag Bank will not charge any fees for transfers.
All clients will be contacted by Zag Bank in the coming days with further details on the next steps and formalities applicable to them.
Zag Bank employs approximately 60 people based in Calgary, Toronto and Montreal. Each of them will receive the necessary support to pursue new opportunities within Desjardins Group and beyond.
"We recently reviewed our activities in Ontario and in the Western and Eastern provinces and decided to concentrate our efforts, resources and investments on innovation and growth in P&C insurance, wealth management and payment services. As a result, we determined that an online or direct bank was no longer a strategic fit with our long term strategy", said Denis Berthiaume, Senior Executive Vice-President and Chief Operating Officer of Desjardins Group.
The financial impact of Zag Bank's wind down will mainly be accounted for in Desjardins Group's third quarter financial results. Since it represents less than 1 % of the Group's assets, it will not be significant.
About Zag Bank
Zag Bank, formerly Bank West, a federally regulated bank founded in 2003, was acquired by Desjardins Group in 2011 as part of the acquisition of Western Financial Group. In 2014, it was renamed Zag Bank and repositioned as a direct bank, offering various financial products through online and mobile applications to consumers across the country, except in Quebec. Zag is a member of the Canada Deposit Insurance Corporation (CDIC).