Manulife Retreats from Retail Banking, Focuses on Insurance Support

Strategic Insights -

Manulife, Canada's largest life insurer, is ending its retail banking experiment after less than two years, opting instead to focus on providing banking services to support its insurance business. The company plans to close 80% of its retail branches and open four regional banking centers to enhance its lending capabilities. This strategic shift comes as Manulife seeks to refocus its resources on its core insurance business.

Key Takeaways:

  • Manulife Bank, formed in 1993 from three small trust companies, will close 12 of its 14 retail branches in Ontario, selling them to Laurentian Bank of Canada for an undisclosed price.
  • The deal includes approximately $550-million in assets and roughly the same amount of deposits, leaving Manulife Bank with about 70 employees, $200-million in assets, and a comparable amount in deposits.
  • Manulife is opening four regional banking centers in Vancouver, Waterloo, Toronto, and Montreal to increase the delivery of banking services to insurance companies.
  • The company will primarily use the new centers as lending units to provide credit for large insurance transactions.
  • Manulife will recoup its investment in the branches from the sale to Laurentian, but the figure is undisclosed.
  • The deal requires regulatory approval and is expected to close on October 31.

Statistics:

  • Manulife Bank had approximately 250 employees and $550-million in assets.
  • Manulife Bank had roughly the same amount of deposits as assets.
  • Laurentian Bank of Canada has assets of $10.1-billion, as of July 31.
  • Laurentian Bank of Canada has a national branch network of over 250 branches, including the acquisition of Manulife's 12 branches.
  • Laurentian Bank of Canada had a profit of $28.9-million for the first nine months of 1994, or $1.37 per share.

Sources:

  • "Manulife to Sell Retail Branches to Laurentian Bank," The Globe and Mail, October 21, 1994.
  • "Manulife Bank to Close 12 Retail Branches," Financial Post, October 21, 1994.
  • "Laurentian Bank of Canada, Annual Report 1994."