CIB, First Nations Bank partner on infrastructure loan deal

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This article was published 07/03/2024 (602 days ago), so information in it may no longer be current.

Potential First Nation-led small infrastructure projects got a big potential boost Wednesday.

In front of about 1,100 people attending the Aboriginal Financial Officers Association national conference in Winnipeg, Bill Lomax, CEO of First Nations Bank of Canada, announced a $100-million partnership with the Canadian Infrastructure Bank.

Access to the additional capital will help FNBC bridge a funding gap that has been plaguing small infrastructure projects on First Nations for years.

It also allows the CIB to put its money to work in smaller projects on First Nations it previously was not able to do.

Saskatoon-based First Nations Bank was founded in 1996 — its Winnipeg brand on Broadway celebrated its 21st anniversary this year — and has a loan portfolio of about $650 million.

The injection of capital from CIB will mean projects such as sewer and water for a small housing development or small-scale solar power generation will have an easier time getting funded, officials said.

“We will bringing that low-cost funding (CIB) would offer but on a smaller scale,” said Lomax, who succeeded FNBC founding CEO Keith Martell last year. “So if you have a $1-million project, the FNBC can now help bring a much lower cost of capital for the First Nation on those kinds of projects.

“Lower-cost financing on even 20 to 30 per cent of a small housing development, for instance, can make a big difference to a First Nation over the long term.”

Lomax and Stephen Scott, director Indigenous infrastructure investments at CIB, agreed demand far outstrips the supply for this type of funding.

“Living conditions in Indigenous communities are unacceptable,” said Scott. “There is a significant funding shortfall and not all of it can be met by grants. Access to capital has always been a problem.

“This program goes a long way to addressing some of that. There is still farther to go, but it’s a great first step.”

The CIB manages a $36-billion fund and has deployed about $400 million of it for Indigenous-led projects over the last 2 1/2 years in 13 large community infrastructure projects.

Scott said the partnership with FNBC makes sense, because CIB — typically involved in plans ranging from hundreds of millions to billions of dollars — is constrained in its ability to due diligence on smaller projects.

“We have an organization set up to deliver on those levels of projects,” he said. “We don’t have an organization that is well-suited to the smaller projects.”

FNBC said it has the scale, staff and specialized understanding of the Indigenous market to be able to manage that type of loan portfolio more efficiently.

The $100 million will be available for FNBC to draw down from, Lomax said.

FNBC will likely provide its own debt financing in the projects the CIB funds are used for, he added. He expects the money to be mostly spoken for in about 24 months.

Interest rates on the cross-Canada, CIB-funded projects will be much lower than on debt financing obtained from other sources, Lomax said.

FNBC’s 19 branches including six located on First Nations. It’s the main lending institution in northern Canada, where the bank has nine branches in the territories.

Lomax, who joined FNBC in May 2023 after 20 years in various positions with Goldman Sachs, said its current loan portfolio of about $650 million will hit the $1-billion mark before long.

“We like to think of ourselves as doing the financial part of nation-building,” he said.

About 200 Indigenous communities are clients of the bank, which has one of the lowest loan loss rates in the country.

martin.cash@freepress.mb.ca