Business Development Bank of Canada : BDC is the successor institution to the Industrial Development Bank (IDB) and the Federal Business Development Bank (FBDB). The Industrial Development Bank was established in 1944 by The Industrial Development Bank Act, 1944 (8 George VI, c. 44), within a larger context of federal government initiatives to help Canadian society and economy make the transition to peacetime after the Second World War. At its inception, the Bank was a wholly owned subsidiary of the Bank of Canada, rather than directly owned by the federal government.
With a focus on small- and medium-sized businesses (SMEs), the mandate of the IDB was to be a 'lender of last resort', that is, to provide loans to businesses which had no access to financing from existing financial institutions, such as the chartered banks. In this way, the federal government was attempting to fill the so-called 'Macmillan gap', a theory (articulated by Britain's Rt. Hon. H. R. Macmillan) which argued that SMEs - due to their size alone - had trouble obtaining financing regardless of the potential success of their business. In the early years, the IDB focussed primarily on the manufacturing and processing sector, but subsequent amendments to the Act in 1952, 1956, and 1961 extended coverage to all types of businesses.
In 1975, the IDB was replaced by the Federal Business Development Bank (the FBDB was established by the Federal Business Development Bank Act, 23 Eliz. II, c. 14). This reorganization saw the inauguration of the FBDB as a separate Crown corporation, owned and funded directly by the federal government; at this time, the link with the Bank of Canada was severed. The mandate of the new Bank was expanded to include providing entrepreneurs with equity financing or venture capital. In addition, the new mandate formalized the Bank's role in providing management services (consulting and training) to entrepreneurs (at this time, the FBDB absorbed the Department of Industry, Trade and Commerce's Counselling Assistance to Small Enterprises (CASE) program).
In 1995, the Federal Business Development Bank became the Business Development Bank of Canada (BDC) with the passage of the Business Development Bank of Canada Act (1995, c. 28). While the new Act streamlined and modernized the FBDB Act, the mandate of the new BDC remained essentially the same as that of the FBDB: to support Canadian entrepreneurship by providing financial and management services. The principal change was conceptual: the newly mandated BDC was to move from being a 'lender of last resort' to being a commercial financial institution that offered products and services complementary to those offered by traditional financial institutions - a 'complementary lender'; this gave the Bank the power to provide services jointly with other institutions. The new Act also streamlined the Bank's capital structure, and clarified its nature as a commercially driven institution required to earn a rate of return at least equal to the federal government's cost of funds. BDC is required by its enabling statute to undergo regular reviews of its mandate; the first review took place 2000 (with subsequent mandate renewal in 2002), and its following reviews were and are still scheduled to be every ten year.
Within the Government of Canada, overall responsibility for supporting SMEs falls to the Minister of Industry (as articulated in the Department of Industry Act, 1995) and accordingly, BDC reports on its activities to Parliament through this Ministry. As such, the Bank is one of several federal departments and agencies which comprise the 'Industry Portfolio'. The Government provides policy direction to the Bank via priority letters addressed from the Minister to the Chairman of the Board, and the Bank's accountability to the Canadian public is manifested in its submission to Parliament of an annual report, and annual summaries of its budget and corporate plan. The governance and accountability regime of the Bank are stipulated in its enabling legislation, and in Part X of the Financial Administration Act. Accordingly, BDC is governed by a Board of Directors, which includes a Chairperson and a President (the CEO). The Business Development Bank of Canada is a Crown corporation under Schedule III, Part I of the FAA.
Since the Bank's inception in 1944, the head office has been located in Montreal. By 1975, there were regional offices in every province, and in 2008, over 90 branches were in operation across the country. The Bank's financing and consulting services are offered primarily through the regional offices.
Section 3(1) of the Business Development Bank of Canada Act (assented to July 13, 1995) stipulates that the Federal Business Development Bank..."is continued as a body corporate under the name "Business Development Bank of Canada".
Revised Statues of Canada 1985, chapter F-6, quoted in the Annual Report to Parliament by the President of the Treasury Board titled "Crown Corporations and Other Corporate Interests of Canada 1999"
InfoSource, 1999-2000, page 58
Gordon Osbaldeston reports that the Industrial development Bank (IDB)was a wholly owned subsidiary of the Bank of Canada. The connections between the Bank of Canada and the succession of development banks seem to have loosened.
