Upset by Royal Bank of Canada's decision last year to close its downtown branch at 602 Queen St. East, the City of Sault Ste. Marie is preparing to end its 35-year business relationship with the nation's second-largest bank.
"There are five major banks in Canada," Ward 3 Coun. Matthew Shoemaker said at this week's City Council meeting.
"All of the other major banks have a branch downtown. I think those are the banks that should receive our support," Shoemaker said.
Royal Bank of Canada (RBC) has been the city's main supplier of banking services since 1987.
The last request for proposals for banking services was issued by the city 20 years ago.
"Last year, we were all surprised that Royal Bank was abandoning our downtown and consolidating their offices uptown," Shoemaker said.
"We are investing in our downtown. Some disagree with that investment. Others are supportive of it. But nevertheless, we all agree as a council, we need investment in our downtown."
"And Royal Bank has shown they are not committed to our downtown. Therefore, I don't believe that we should be committed to them, for that reason."
On Monday, City Council authorized city staff to renew the city's agreement with RBC for one more year.
But staff were also advised to kick-start the lengthy process of issuing a new request for proposals for bank services.
Monday's discussion started when Shoemaker expressed concern about being asked on March 21 to extend a banking services agreement that ends March 31.
"From a procedural standpoint, it is clear the assumption is that council is going to approve this," Shoemaker said. "It doesn't give us enough time to do what you're suggesting would need to be done if we turned it down."
Malcolm White, the city's chief administrative officer, conceded the impending expiration of the city's banking arrangement was "overlooked to a degree, by both the provider and ourselves."
"We do recognize that it has been brought to you in a very short time frame, and it does in essence preclude what council may want to do," White said.
"Thank you. That's very honest answer," Shoemaker said.
The agreed-on extension offers transaction fees that are essentially the same as what the city is paying now.
Deposit interest will be cut by five basis points.
The extension agreement also includes a 90-day cancellation clause, which the city is expected to invoke shortly after the request for proposals has identified a suitable source for banking
"The CFO [chief financial officer Shelley Schell] and finance staff recognize that it is time to go and test the market," White said. "That's why they recommended a one-year extension only. It is the intention to test the market next year."
"I intend on supporting the resolution," said Mayor Provenzano.
"I frankly think that... we're going to get to the end that Coun. Shoemakerr is hoping to get to, in the natural course."
"I wholeheartedly agree with Coun. Shoemaker. I think we've served notice and we've given all the reasons why we want to pursue it vigorously," the mayor said.
"It would be nice if the bank had a branch downtown," said Ward 2's Luke Dufour. "I'm happy to follow the process that makes the most sense to get us to that goal."
"I think it's pretty clear they see the sentiment from council," added Mayor Provenzano. "Coun. Shoemaker articulated it well. I haven't heard anybody disagree with it. I'm sure staff will take that under advisement."
"We do have the message loud and clear, and I'll follow up with the staff," promised CAO White.
"Changing bank services will have a significant impact on city operations as the bank is intricately tied into the financial controls of the city in relation to deposits, disbursements, short term borrowing, corporate credit cards and cash handling," said CFO Schell in a report to the mayor and councillors.
"Over the term with RBC, banking services have evolved to automated, electronic methods for daily operational activities such as payments, deposits and bank reconciliations."
"Services for fraud prevention have also been utilized to mitigate the risk of to the city. The changeover will be a labour intensive process and require significant staff time. Staff is recommending that the request for proposals be for a five-year term with a five-year option to extend."
"Short-term investments will not be included in the request for proposals as they are covered within the Investment policy and not tied directly to the banking services agreement," Schell said.