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Saturday, May 25th, 2024

Broker Lender Applies for Bank Charter – Need real estate financing – find a Vancouver mortgage broker

Broker Lender Applies for Bank Charter

Adil J. Virani - Vancouver Mortgage BrokerWithin a few years, you may have another option when it comes to banking. The fourth-largest broker channel lender by market share, Street Capital, has made public its intention to become a licensed bank. So not only will the company offer real estate financing, but also traditional banking products.

Currently, the company prefers to deal with end-clients through an honest vancouver mortgage broker as the middleman.

According to Paul Grewal, President of Street Capital, a bank license would give the company the ability to offer a larger number of products as well as have greater flexibility; in an increasingly competitive industry, Grewal feels this would allow the company to better differentiate itself.

We believe he is correct to the extent that the company could offer something other than just low mortgage rates.

Despite the intention to expand into a new operating area, Grewal says he is confident that the business will continue growing with the current model. Current clients will still be able to deal with the lender through their trusted  Vancouver mortgage broker.

A broader range of products would allow the company to tap into a larger client base, assuming it’s approved as a bank.

The company plans to target groups of Canadians it feels are not well serviced by other large financial institutions in Canada. These groups include younger Canadians, self-employed Canadians, and Canadians who’ve recently immigrated to the country and are interested in more than Vancouver home mortgages.

If its license application is approved, the company will begin operating under the name, Street capital Bank of Canada.

According to Grewal, it’s still too early to figure out exactly what services and products the company will offer beyond Canadian and Vancouver home mortgages when (and if) it becomes a bank. The products might include credit cards, personal loans, and lines of credit. Regardless, residential mortgages would still account for the majority of the company’s revenue.

Since the company debuted in 2008, it has come from literally nil sales to become the fourth-largest market lender for brokers in the country, boasting a market share of 7.7% in the 2nd quarter of this year. $9.5 billion in mortgages (including Vancouver home mortgages) were under the company’s administration as of June 30, 2012.

Even with the company’s successful track record, a variety of new challenges come along with a banking license. These include: additional costly and time-consuming regulations, a high level of competition for deposits (forcing any new lender to pay out premium rates) which have the effect of reducing margins, and increasingly burdensome some capital requirements such as the Basel III rules which will begin to be phased in as of January 2013.

Despite all this, Street capital believes it will be successful, and this is not without reason. The company’s CEO, CFO and President all previously worked as high-ranking CIBC executives.

The company’s application will require approval from the Minister of Finance as well as the Office of the Superintendent of Financial Institutions. The company predicts that this process will take a minimum of 2 years. During this time we expect the company to continue offering low mortgage rates.

If and when approved, the company doesn’t plan on straying too far from its roots. According to Grewal, the company has historically been in favor of operating through broker channels and does not plan to change its strategy going forward. “We believe brokers provide sound impartial advice to clients,” says Grewal. For this reason, he claims the company will remain broker-focused. This is good news for any honest Vancouver mortgage broker out there.

Currently, the company is a subsidiary of Counsel Corp, which trades on the TXS as CXS. Counsel Corp. acquire the company on May 31, 2011.


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