Newsrelease

June 10, 1997
Edmonton, Alberta

"For 59 years Alberta Treasury Branches (ATB) has operated with close ties to government. While that approach has served Albertans well it limits ATB's ability to compete effectively with other financial institutions. With this legislation, ATB will operate with the same kinds of rules that other banks and financial institutions follow."

- Stockwell Day, Provincial Treasurer

New Legislation Strengthens Alberta Treasury Branches' Ability to Compete

Amendments to the Alberta Treasury Branches Act introduced in the legislature today will set the stage for a new arms length relationship with government. The overhaul of this legislation is intended to provide clear powers for the Board of Directors and Chief Executive Officer in ATB, replacing the powers formerly held by the Provincial Treasurer.

The legislation reinforces many of the changes made over the last year. A new board has taken over responsibility for setting the direction for ATB, new policies and lending practices are in place and a new business plan sets the priorities for the next three years.

Key features of this legislation include:

• establishing ATB as a provincial corporation

• ATB will have the capacity to contract and generally undertake its business with the same legal certainty as other corporations, especially financial institutions

• the Board has the responsibility to set employment policy and conditions of employment like salary and benefits
• restricts ATB's business to providing financial services similar to other financial institutions so that depositors money is not at risk in unrelated businesses. It prohibits ATB from: acting as a receiver or liquidator; guaranteeing unfixed sums of money; acting as an insurer, agent or adjuster within the meaning of the Insurance Act; acting as an information management corporation; real estate broker; and carrying on any other activity prescribed by regulation.

• Executive Council will have the ability to levy a deposit guarantee fee, recognizing the cost to government of the guarantee of ATB deposits. This puts ATB on the same playing field as banks and credit unions who are required to pay deposit guarantee fees.

• ATB Board is required to establish prudent loan and investment standards and to review its investment management practices every year

• ATB is now allowed to invest in entities in specific areas such as trust companies, securities dealers and insurance companies. Limits are set on real estate investments. Government policy will limit ATB insurance involvement to term life and other annuity related insurance products, and will prohibit co-location and client information sharing. Cabinet approval will be required before ATB can establish subsidiaries.

• Board has "duty of care" which means they must balance the interests of depositors, government as owner and the effective operations of ATB in all the decisions they make.

• requires that the Board produce annual financial statements

• ATB will be required to take a portion of each years profits and build a capital base

• ATB will continue to be subject to audit by the Auditor General.

The Provincial Treasurer maintains the right to order ATB to cease and desist from an action if he feels that action is contrary to the Act and regulations. This legislation must also be reviewed every five years.

"This legislation will usher in a new era for ATB. It puts them on the same footing as other financial institutions and strengthens their ability to compete in Alberta's growing marketplace," said Stockwell Day. "Now is the right time for government to step back and allow ATB to conduct business like any other financial institution. I'm confident that this will see ATB provide even better products and service to the hundreds of thousands of Albertans who count on ATB."

For more information please contact:

Trish Filevich
Director of Communications
Alberta Treasury
(780) 427-5364
webmaster@treas.gov.ab.ca

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