31 May 2021  /  by:

Central 1

  /  5 minutes

Part 2- Central 1’s Brent Clode: Leading the Treasury team through a pandemic

In part 1, we learned about the events that transpired in spring 2020 when COVID-19 was declared a pandemic and how the Treasury business supported members. In part 2, we learn more about Brent’s extensive financial services experience, his role at Central 1 and the lessons learned in the past year.

Drawing from experience

Reflecting on the past year, only someone with Brent’s experience can say unassumingly: “It was an interesting year.”

Brent joined Central 1 in 2015 as Chief Investment Officer (CIO) and has over 25 years of professional experience in banking and insurance. He spent seven years at Manulife Financial, as Vice President of Treasury Risk Management, Funding & Liquidity Operations. In this role, he was responsible for overseeing global liquidity management and structural foreign exchange risk management, derivative hedging strategies and compliance.

Although he enjoyed his time in the insurance industry, he was happy to return to banking where he started his career.

Prior to Manulife, he spent the first 12 years of his career progressing through the ranks at CIBC, starting as an Associate in Fixed Income & Money Markets, moving into a Senior Manager role in the Chief Accountant’s office, then into the role of Executive Director, Treasury, Balance Sheet & Risk Management group. Eventually he became the Director of US Finance for CIBC World Markets in the New York office and then Director of the Treasury & Risk Management Finance division.

He holds an MBA in Finance from McMaster University and Bachelor of Arts in Administrative and Commercial Studies from the University of Western Ontario. He’s also a Chartered Financial Analyst (CFA), and a board member and chair of the audit committee of Aviso Wealth.

Responsibilities as Central 1’s CIO

In addition to his responsibilities for operating the Treasury business and the suite of products and services offered to members and clients, and liquidity risk management and funding, Brent is also responsible for the relationship with the Bank of Canada (BoC).

Central 1 has a direct relationship with the BoC to help foster a stable and efficient financial system — acting as group clearer to the BoC for Canadian credit unions.

Brent is also responsible for the relationship with investors and our two credit ratings agencies – Morningstar DBRS and Fitch Ratings. As a rated entity, Central 1 can access capital markets. In turn, this provides credit unions with access to derivatives, foreign exchange, and other products.

Most importantly, it enables Central 1 to provide funding at a low cost of funds to credit unions. Central 1’s assets are predominantly invested in marketable securities, enabling Central 1 to provide significant funding commitments to members.

In addition, Central 1’s collaborative relationship with regulators enables Central 1 to ask for more clarity on regulatory issues — though the Canadian Credit Union Association represents the credit union system on regulatory issues.

As the CIO and an executive on the management team, Brent said one of the biggest differences coming to a smaller organization like Central 1 compared to a large financial institution is his broad mandate.

“I’m exposed to a lot. Not only am I running a business line, but I also need to think about delivery, client satisfaction, pricing, relationships with our members, regulators, rating agencies, investors and the BoC. As a member of the executive leadership team, I’m also a part of corporate strategic decisions,” he replied. “It’s a diverse role and I really enjoy working at Central 1.”

With five years at Central 1 under his belt, Brent has made significant accomplishments in the organization. Something he is most proud of, but admittedly says he can’t take credit for, is the quality of the Treasury team. Many of the team members were at Central 1 before he started.

“Their level of expertise, knowledge of the system, strategic thinking, passion and dedication is inspiring,” he said with a smile. “They all want to do right thing and help our members.”

There is no better example of this than the recent successful segregation of the Mandatory Liquidity Pool (MLP) totalling approximately $9 billion.

On January 1, 2021, Central 1 successfully transitioned overall liquidity management within B.C. and Ontario credit unions from a deposit structure to an investment structure for the benefit of the credit union system. This once in a generation shift was completed within one year — during a pandemic no less — to create closer alignment with federal and international regulatory standards.

The project team consistently pivoted, collaborated, and consulted with multiple stakeholders and moved very quickly and easily in a fast-changing environment. Their commitment to the project and goals meant they were prepared for changes and delivered on tight timelines while staying on budget.

“In the midst of a pandemic and their own personal challenges with remote working, our team really came together. Execution of the project was smoother than I could have ever imagined. It really is a testament to the quality of our people.” Brent said proudly. “There was so much going on last spring. We were focused on the health of the credit union system and a potential liquidity crisis, all the while having to segregate the MLP.”

Lessons learned

The year 2020 really showed us the best of the system, but it also exposed the fragility of financial institutions and accelerated the pace of change.

With low interest rates here to stay, margin pressure, competition from banks and fintechs, and the need for improved efficiency ratios, there’s no question Central 1 and the credit union system need to evolve said Brent.

The operating environment means Central 1 and credit unions need to make intentional steps to ensure their success into the future. It’s important to be efficient and find the most relevant opportunities to leverage scale and collaboration.

“Credit unions have distinct advantages over banks in how they can adapt to industry disruption. Their size lends to agility, and their inherent ESG nature should resonate as an attractive alternative. The system just needs to leverage these advantages, and quickly,” he emphasized. “By adapting to the changes impacting all financial institutions across Canada, and those specific to credit unions and Central 1, we can continue to evolve to meet the current and future needs of our members and clients.”

Status quo is no longer sustainable.

“We all have an opportunity to learn from each other, work together and adapt to this rapidly changing environment,” he concludes.