First Nations Bank of Canada President and CEO Bill Lomax on June 21, 2023 in Ottawa.Dave Chan/The Globe and Mail
The Canada Infrastructure Bank has struck a $100-million loan agreement with the First Nations Bank of Canada, in a deal meant to make it easier for Indigenous communities to borrow money to build infrastructure, including homes, roads and water-treatment plants.
The agreement will match FNBC’s cross-country network with CIB’s financial muscle and allow First Nations, Inuit and Métis communities to build projects faster than they can under current conditions, said FNBC chief executive officer Bill Lomax.
“We’ll be able to bring a lower cost of capital to communities. And that’s good for everybody involved,” Mr. Lomax said in an interview.
CIB is a federal Crown corporation, while FNBC is an Indigenous-owned bank that lends primarily to Indigenous clients. Under the new agreement, FNBC will provide matching loan funds and manage the portfolio.
The agreement follows several other recent Indigenous financing developments, including the B.C. government announcing in its February budget a $1-billion Indigenous loan guarantee program and Ottawa previously saying the next steps for a federal Indigenous loan guarantee program would come in this year’s budget.
Indigenous groups have been pushing for such programs to bridge funding gaps for Indigenous communities, pointing to existing models in Ontario and Alberta that have paved the way for multimillion-dollar deals such as a $1.1-billion 2022 transaction in which a First Nations and Métis consortium bought a minority stake in seven Enbridge Inc. ENB-T pipelines.
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But while those programs focus on big deals, the loan agreement between CIB and FNBC is designed to fund more modest projects, such as a small housing development.
“We typically don’t do projects under $5-million. So this really hits home to some of those smaller projects that communities need,” said Hillary Thatcher, CIB’s managing director of investments.
The partnership between the Crown corporation and the First Nations Bank developed through work on Kahkewistahaw Landing, an urban development project in Saskatoon.
In that project, CIB provided loans for infrastructure such as water lines, while FNBC was the lender for on-site businesses, including a gas station and other commercial space.
As lending for that project rolled out – almost $60-million in all, with CIB providing around $15-million and FNBC contributing the rest – an idea took hold, said Ehren Cory, CIB’s chief executive officer.
“The question was, how could we do that at scale? And the way to do that is not to, one at a time, go find the next Kahkewistahaw. It’s to put together a fund … to go out and do that across all of the communities that Bill and his team are in across Canada,” Mr. Cory said.
Founded in 2017 with $35-billion in government capital, the CIB has a mandate to partner with public, private and institutional investors to build large, revenue-generating infrastructure projects in sectors the government has set as a priority, including public transit and Indigenous communities. The CIB has been criticized for moving too slowly; a 2021 report by the Parliamentary Budget Officer found the CIB was unlikely to meet its spending targets.
But the pace of deals has increased in recent years. In its most recent quarterly report, for the three months ended Dec. 31, 2023, CIB said it had made a total of 56 investments worth more than $11.6-billion.
Asked about accountability for the new lending program, Mr. Lomax said both CIB and FNBC have measures in place to assess and monitor any deals in which they get involved.
“We are a for-profit bank. So, when we lend out that money, we have skin in the game. We are not in the business of trying to lose money. So, we will absolutely have an ongoing risk-monitoring program in place for the projects,” Mr. Lomax said.