Background
The Alberta Treasury Branches were created by the Social Credit government of Premier William Aberhart in 1938, with its roots dating back to political unrest in 1917 arising from the unmet credit demands of the West.[9] Prior to ATB Financial's formation, Aberhart and Social Credit swept into power in the 1935 Alberta election in a wave of unrest following scandals surrounding the United Farmers Premier John Edward Brownlee. Aberhart's government sought radical monetary reform in a province which was devastated by the Great Depression, as well as greater economic autonomy from both the federal government and financial institutions based largely in Toronto and Montréal.[9]
However, in two years Aberhart's government failed to bring forward promised reforms, which resulted in a backbencher revolt forcing the government to pass three pieces of controversial financial reform acts. Credit of Alberta Regulation Act required all bankers to obtain a licence from the Social Credit Commission, Bank Employees Civil Rights Act prevented unlicensed banks and their employees from initiating civil actions, and Judicature Act Amendment Act prevented any person from challenging the constitutionality of Alberta's laws in court without receiving the approval of the Lieutenant-Governor in Council. In August 1937, the federal government disallowed all three acts. The Supreme Court of Canada, in answering reference questions posed by the federal government, unanimously ruled that such disallowance was valid.[10]
Aberhart returned with three new bills, Bank Taxation Act (Bill 1) levying provincial taxes on banks' paid-up capital and reserve funds at punitive rates, Credit of Alberta Regulation Act, 1937 (Bill 8) similar to the previous disallowed act, but covering all "credit institutions", and Accurate News and Information Act (Bill 9) requiring newspapers to print "clarifications" of stories considered inaccurate by the Social Credit Board, and to reveal their sources on demand, and also authorizing the provincial government to prohibit the publication of any newspaper, any article by a given writer, or any article making use of a given source. All three bills were reserved by Lieutenant Governor John C. Bowen, and the federal government posed the reference questions to the Supreme Court. In Reference Re Alberta Statutes the Supreme Court ruled all three bills as ultra vires.
Aberhart sought to create a State Credit House which facilitated some banking services in small communities where larger banks had previously closed. Subsequently, the Aberhart government created the Alberta Treasury Branches through a series of Orders in Council in late-August and early-September 1938, following the judicial defeat at the Supreme Court of legislation passed by the Social Credit government. The Aberhart government authorized the Treasury Department to establish "branches of the provincial treasury" and with $200,000 of provincial funds as capital, the first Alberta Treasury Branch was opened in Rocky Mountain House on September 29, 1938, followed by branches in Edmonton, Andrew, Grande Prairie, Killam, and St. Paul which opened the next day. The first employees of the Treasury Branches were provincial civil servants with previous banking experience, many of whom were transferred from the Treasury Department's Sales Tax Branch following the abolishment of the provincial sales tax. Besides banking, the Treasury Branches served as government offices and propaganda centres.
The Aberhart government was able to utilize the Treasury Branches to operate the "Interim Program", which was an attempt to provide the citizen's dividend promised by the Social Credit government in 1935. The Interim Program's name indicated the temporary nature of the program, which would remain in place until a complete system of Social Credit could be established in Alberta. Under the interim program, the Treasury Branches issued non-negotiable transfer vouchers in place of regular currency that could be redeemed at participating merchants in the province. Consumers who purchased goods from participating merchants that were partially produced in Alberta would earn a "bonus" in their account of up to three per cent, the full bonus (in the form of transfer vouchers) being earned if one-third of a consumers aggregate monthly purchases were "Alberta-made". The one-third Alberta-made program was generally ineffective in increasing domestic market demand as it was easy for consumers to meet the low threshold over the period of one month.
Changes in 1950s and 1960s
During the 1955 Alberta election the Treasury Branches came under scrutiny for allegations of preferential treatment for loans to members of the Legislative Assembly (MLAs), as well as preferential contracts awarded to firms indebted to the provincial government. The Treasury Branches provided significant loans to a handful of road construction companies, with the firm Sparling-Davis provided $4.5-million in loans, which was more than 20 per cent of the Treasury Branches overall loans. Premier Ernest Manning reluctantly approved a Royal Commission to look into the lending practices of the Treasury Branches the day before the 1955 election, the commission was led by Hugh John Macdonald and James Mahaffy. The commission was provided with narrow terms of reference and found there was no evidence of maladministration or wrongdoing by the government or the Treasury Branches. [11][12][13] Prior to the formation of the commission the government responded to the allegations by introducing a bill in 1955 which prevented MLAs from borrowing from the Treasury Branches.[14]
The 1967 Royal Commission on Banking and Finance led by Justice
Oil and gas boom and bust
The Alberta economy grew significantly in the 1970s and early 1980s due to the rising price of oil. Total loans issued by the Treasury Branches grew from $10.6-million in 1950 to $1.9-billion by 1981.
However, despite significant growth, prosperity would not last forever. All Alberta industries suffered in the early 1980s owing to high interest rates, low world commodity prices, and the National Energy Program. The Treasury Branches were no exception, posting the first of six consecutive years of losses in 1983. Other regional financial institutions suffered at this time with the collapse of the Canadian Commercial Bank and the Northland Bank in 1985.[15][16] By 1989 the Treasury Branches had an accumulated deficit of CA$150 million.
ATB was the subject of scandal in the late 1980s after clients such as Peter Pocklington's Gainers Foods[17][18]
1990s
In the 1990s, the government reformed Alberta Treasury Branches with the intention of transforming it into a financial institution that could compete with Canadian chartered banks. Public trust was eroded during the 1980s and 1990s as high-risk loans with political motivations eroded the Treasury Branches financial footing, including a $100-million loss in 1996.[20]
By 1994, there were 142 Treasury Branches, 125 agencies, 3,000 staff and 80 automated teller machines in Alberta. The Klein government appointed Gordon Flynn to review the Treasury Branches operations, Flynn recommended a number of changes including greater autonomy, financial accountability measures and the appointment of a Board of Directors. Flynn's recommendations were reviewed by a working group chaired by former federal finance minister Don Mazankowski, which provided nine further recommendations for the operations of ATB. Mazankowski recommended the government articulate the public policy goals and benchmarks for the institution, ATB must operate at an arms-length from the government, operate under a board of directors, be provided equal treatment against other private sector banks, modernized to allow ATB to compete with modern banks, offer new and in demand financial services and products, deliver programs with a for profit emphasis, remain cost conscious and profit motivated, and be subject to an accountability regime similar to the private sector.
Provincial Treasurer Jim Dinning quickly introduced legislation to create an independent board of directors made up of government appointees was established in 1996 and ATB formally became an autonomous provincial Crown corporation on October 8, 1997.[20]
2000s to present
The Alberta Treasury Branches rebranded in January 2002 as ATB Financial in an effort to gain stronger brand recognition in urban areas such as Calgary and Edmonton. By 2002 ATB Financial controlled 15 per cent of the province's retail banking, but lagged in the cities with seven per cent in Calgary and eight per cent in Edmonton.[21] The official change of name for the crown corporation did not occur until 2017.[22]
ATB was not immune to the 2008 financial crisis, when over $1.2-billion of non-bank sponsored asset-backed commercial paper became illiquid. The financial crisis resulted in special provisions for credit loss of $253-million and $225-million in 2008 and 2009. Alberta's Auditor-General noted that inappropriate incentives may have been to blame for insufficient due diligence on for the losing securities. The Progressive Conservative government responded in July 2009 when Finance Minister Iris Evans announced a number of government programs to strengthen ATB's balance sheet including providing $600-million in notational capital, and changes to requirements for capital adequacy test.
In 2015, the New Democratic government capitalized ATB Financial with an additional $1.5-billion to promote lending access to small and medium-sized businesses. In 2021 Fast Company named ATB Financial one its 100 Best Workplaces for Innovators
