By Paul Weinberg
TORONTO, Jun 29 2002 (IPS)

Canada’s poor and immigrants are being seriously disadvantaged by the closure of bank branches across the country.

Here, in the high rise downtown community of St Jamestown, which local activist and resident Josephine Grey calls “the landing strip” for immigrants and refugees, she says there is only a single bank branch left servicing a population of about 60,000 people.

“I was actually in the Royal Bank, which was my branch, and they had put up notices they were closing. And I asked the manager at the time why the bank was closing. And he said, ‘well, it’s not worth our while and we’re tired of the welfare line-ups,” recalls Grey, a community legal worker at the Income Security Legal Clinic.

Many of the residents of St. Jamestown are on social assistance and more of them will cash their regular government welfare cheques at one of the alternative private cheque cashing outlets — which charge three percent per transaction plus two dollars — rather than travel further by foot or bus in the city to the next nearest bank branch, says Grey.

She has met new immigrants who thought that these cheque-cashing outlets, part of the Money Mart chain, are the only source of banking services in the whole country.

“It is incredibly expensive, especially for poor people who have just gotten here and are trying to scrape by on an unimaginably low amount of money. They can’t take transit, they cannot afford a telephone,” says Grey.

Banks make more money in middle and upper income neighbourhoods where people are able to afford larger bank accounts and mortgages, says Linda Lalonde, president of the National Anti-Poverty Organisation, based in Ottawa.

Even credit unions, member-run financial institutions that are established as friendlier alternatives to the large federally chartered banks, cannot afford to set up shop in a community like St. Jamestown because the money circulating in the community is insufficient to make opening a bank branch worthwhile, adds Lalonde.

The alternative is for the provincial or the Canadian government to subsidise community banking for poor communities, says Grey.

The Canadian Bankers Association (CBA), which represents the major federally chartered banks in Canada, will not reveal how many bank branches have been closed.

But Denise Harrington, a DBA spokesperson, says that customers are voting with their feet to avoid the long queues at the bank branches by relying more and more on automatic banking machines or doing their banking on the telephone or on the Internet.

Much of the customer banking, whether it involves updating a balance or having wage cheques directly deposited into the account by an employer, can be accomplished without going to a bank branch.

Canadians, says Harrington, “have become the highest per capita users of ABM and debit cards (which allow customers to make payments for goods or services directly out of their bank accounts) in the world.”

The assumption made here is that people still do not need the convenience of a local bank branch to make arrangements that require the attention of a teller, says Grey. “What if there is a mistake? You are going to go nine miles to some place that has never seen your face and couldn’t care less.”

Lalonde and Grey represent people who live from cheque to cheque and have no money left after the rent and food are paid.

At the same time, says Grey, “one has to have a bank account to participate in our society.”

Poor people, says Lalonde, have difficulty opening a bank account when the banks require at least two pieces of photo identification and a minimum deposit of 50-100 dollars that cannot be withdrawn for up to six months.

“Depending upon the province (in Canada), they charge somewhere 60 dollars and 100 dollars a year just for the driver’s license. That is five to ten bucks a month coming off the table,” says Lalonde.

Under new regulations in the Bank Act, banks will be required to notify local residents months ahead of time and consult them if a local branch is being shut down.

Lalonde reports that local residents invariably find themselves trying to undo a decision already made by the banks.

Once in place next year, the new banking regulations will require Canadian banks to reveal how much a branch has invested in the local community in terms of charitable donations and the financing of local development.

This is insufficient for Duff Conacher, who heads the Ottawa based Democracy Watch and is the founder of the Canadian Community Reinvestment Coalition.

One complaint about the new bank regulations is that consumers have to rely on the banks themselves for information regarding the profitability and accessibility of local branches. Conacher suggests that an independent audit of bank branches would offer more reliable information.

“Are branches discouraging the opening of new bank accounts” and thus making closure inevitable, he asks. “It is easier to have debate if you can get the information.”

The Democracy Watch co-ordinator notes that in the neighbouring United States, the opening and closing of bank accounts by local banks have to be publicly disclosed to ensure that particular communities are not suffering from racial or class discrimination.

Conacher says that the large Canadian banks — Royal, Scotiabank, Bank of Montreal and TD-Canada Trust — are among the largest and most profitable financial institutions in the world.

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