Province of Ontario Savings Office
Encyclopedia
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The Province of Ontario Savings Office (POSO) was a government-run bank
Bank
A bank is a financial institution that serves as a financial intermediary. The term "bank" may refer to one of several related types of entities:...
ing institution created by the Ontario Government in 1922, and closed in 2003 when its assets were sold to the Desjardins Credit Union.
History
The Savings Office was created by the United Farmers of OntarioUnited Farmers of Ontario
The United Farmers of Ontario was a political party in Ontario, Canada. It was the Ontario provincial branch of the United Farmers movement of the early part of the 20th century.- Foundation and rise :...
government of Premier
Premier of Ontario
The Premier of Ontario is the first Minister of the Crown for the Canadian province of Ontario. The Premier is appointed as the province's head of government by the Lieutenant Governor of Ontario, and presides over the Executive council, or Cabinet. The Executive Council Act The Premier of Ontario...
Ernest C. Drury to provide loans to farmers and other small borrowers who traditionally had limited access to credit, as well as to offer savings accounts paying interest on small deposits, something Canadian chartered banks at the time did not do.
POSO's authority to make loans was withdrawn by Premier Howard Ferguson
Howard Ferguson
George Howard Ferguson, PC was a Conservative politician and the ninth Premier of Ontario, Canada, from 1923 to 1930.-Background:He was the son of Charles Frederick Ferguson who served in the Canadian House of Commons...
's Conservative
Progressive Conservative Party of Ontario
The Progressive Conservative Party of Ontario , is a right-of-centre political party in Ontario, Canada. The party was known for many years as "Ontario's natural governing party." It has ruled the province for 80 of the years since Confederation, including an uninterrupted run from 1943 to 1985...
government that took office in 1923, and the institution's operations were effectively reduced to that of a government-run savings bank
Savings bank
A savings bank is a financial institution whose primary purpose is accepting savings deposits. It may also perform some other functions.In Europe, savings banks originated in the 19th or sometimes even the 18th century. Their original objective was to provide easily accessible savings products to...
, offering savings, demand-deposit
Demand deposit
Demand deposits, bank money or scriptural money are funds held in demand deposit accounts in commercial banks. These account balances are usually considered money and form the greater part of the money supply of a country.-History:...
and term-deposit accounts at interest rates slightly higher than those available from commercial banks.
At the time of its closure, POSO had twenty-eight branches serving about 50,000 customers, approximately 100,000 accounts with deposits totalling about $CAD
Canadian dollar
The Canadian dollar is the currency of Canada. As of 2007, the Canadian dollar is the 7th most traded currency in the world. It is abbreviated with the dollar sign $, or C$ to distinguish it from other dollar-denominated currencies...
2.8B, and was responsible for coordinating the sale and distribution of Ontario Savings Bond
Ontario Savings Bond
Ontario Savings Bonds are bond securities issued by the province of Ontario. Introduced in 2001, OSBs' principal and interest are backed by the Province of Ontario...
s.
Sale and Closure
In the provincial budgetGovernment budget
A government budget is a legal document that is often passed by the legislature, and approved by the chief executive-or president. For example, only certain types of revenue may be imposed and collected...
of 2001, Ontario finance minister
Finance minister
The finance minister is a cabinet position in a government.A minister of finance has many different jobs in a government. He or she helps form the government budget, stimulate the economy, and control finances...
Jim Flaherty
Jim Flaherty
James Michael "Jim" Flaherty, PC, MP is Canada's Minister of Finance and he has also served as Ontario's Minister of Finance. From 1995 until 2005, he was the Member of Provincial Parliament for Whitby—Ajax, and a member of the Progressive Conservative Party caucus...
signalled the government's intention to sell POSO's assets to the private sector
Private sector
In economics, the private sector is that part of the economy, sometimes referred to as the citizen sector, which is run by private individuals or groups, usually as a means of enterprise for profit, and is not controlled by the state...
, announcing that the Province was "getting out of the banking business" as part of the government's privatization
Privatization
Privatization is the incidence or process of transferring ownership of a business, enterprise, agency or public service from the public sector to the private sector or to private non-profit organizations...
program to end "wasteful activities that could be eliminated".
Critics, most notably the Ontario Public Service Employees Union
Ontario Public Service Employees Union
The Ontario Public Service Employees Union is a trade union that represents about 120,000 employees in the broader public service of the Province of Ontario, Canada. The current president of OPSEU is Warren "Smokey" Thomas. Prior to Thomas OPSEU was headed by Leah Casselman. Casselman was the...
, the provincial public-sector union
Trade union
A trade union, trades union or labor union is an organization of workers that have banded together to achieve common goals such as better working conditions. The trade union, through its leadership, bargains with the employer on behalf of union members and negotiates labour contracts with...
that represented POSO's two hundred employees, objected that the sale was ideologically motivated, as POSO actually turned a small annual profit of about $10 million, and moreover that, as POSO's deposits went to Ontario's consolidated revenue fund, from which they could be loaned to the government at rates below those available from private lenders, the government was actually increasing its borrowing costs at a time when its stated objective was eliminating the province's burgeoning budget deficit.
An unsuccessful petition campaign was mounted to attempt to convince the government to abandon its plans for the sale, but the assets were sold to the Desjardins credit union
Desjardins credit union
The Desjardins Credit Union was an autonomous Ontario credit union whose creation was funded by the Desjardins Group in a 2003 buyout of the Province of Ontario Savings Office.As of 2010, the credit union had 50,000 members and CDN$1.4 billion in assets....
and POSO ceased operations on April 1, 2003.