Anthony Lacavera says that the big banks domination is bad for Canadians
Canada’s banking industry is dominated by a few large players and the founder of Globalive wants to change that as he leads a bid for Wealth One Bank of Canada.
Anthony Lacavera says that the big banks “oligopoly” means less competition, higher prices, and a worse experience for Canadian consumers, and he’s aiming to shake things up by taking a controlling stake in the Schedule 1 banking licence holder.
His plan it to acquire a 54% majority stake in Wealth One through a special purpose vehicle with existing shareholders holding the minority share. Although his partners in the bid have not been named, he told BNN Bloomberg that they are a mix of Canadian and U.S. backers.
The deal would be worth around $51 million and there could be further injections of capital in years to come of up to $200 million.
Lacavera is well known for launching Freedom Mobile to take on the big telecoms firms in Canada, and with strong immigration providing a new flow of potential customers for Wealth One, which had an initial focus on the Chinese immigrant community when it launched in 2016, he sees potential for growth. Although the wider population is the ultimate target.
“We see some 500,000 new Canadians coming in every year, and of course they’re looking for telecoms, which we’ve serviced in the past, and of course looking for banking relationships, which we will service now hopefully, with regulatory approvals, going forward,” he said. “From there we will most certainly expand into offerings for all Canadians.”
His interest in the Canadian banking industry is not new, he says it’s been on Globalive’s to do list for some time, but until now there hasn’t been the right entry point to build something on top of a solid foundation.
National security concerns
While Wealth One has regulatory restrictions due to national security concerns from the federal government citing potential links to the Chinese government. This led to three investors being told to cut ties with the bank last year.
Despite that, Lacavera says the bank is well run and a very solid business and believes that the bid would hopefully ease regulatory and government concerns.
He acknowledges that breaking the dominance of the big banks is not going to be easy due to their scale and governance but sees the opportunity to acquire the majority stake in Wealth One as a long-term strategy and says he relishes the challenge.
“I’m very confident that what’s been built by the founders of Wealth One bank is a very solid foundation, there’s a good customer base that has proven to be very resilient,” he said, noting that the road to good profitability margins is a long-term goal that will not be achieved overnight.
Asked about RBC’s acquisition of HSBC Canada, which also had a strong focus on newcomers to Canada, Lacavera said that it was part of the decision process to launch this bid. While stating that RBC is a well run bank (he’s a shareholder) he says that consolidation in the market tends to weaken competition and challengers to that is important for the economy.
However, the focus on the Canadian banking sector does not mean Lacavera is done with telecoms, telling BNN Bloomberg that he will continue to look at opportunities.
