It may be still two years away, but some brokers believe Street Capital’s chartered bank status ambitions are a step in the right direction.
“This is a very good development,” said James Laird, broker for True North in Toronto. “Street Capital is very dedicated to the broker channel and as a bank I can see the opportunities for them to offer brokers better products and services.”
On Tuesday, Counsel Corp. and its subsidiary Street Capital, announced that the residential mortgage lender intends to apply to the OSFI and Finance Minister Jim Flaherty for approval to operate as a federally regulated Schedule 1 bank.
The application process could take as long as two years, according to Paul Grewal, president of Street Capital, but he offered brokers his assurance that his company will not abandon the channel.
“We will absolutely continue to support the broker channel,” Grewal told MortgageBrokerNews.ca.
Securing a chartered status could mean “greater flexibility” for Street Capital to provide the channel with better products, according to Laird.
“For example, once Street Capital becomes a bank, it will no longer become susceptible to the dictates of insurers,” he said. “Right now they need to follow CMHC rules. But as a bank, Street can offer the terms they prefer on unsecured loans.
Ron Alltree, broker for Dominion Lending Centres in Mississauga, is also optimistic about Street Capital’s strategy but added that keeping its broker ties is critical for the mono-line.
“If Street gets the approval, they will be competing with the Big 5,” he said. “Now, more than ever, Street will need the backing of the channel.”
He said Street’s transactions with brokers will be a vital differentiating factor as the larger banks exit the channel.
“The worst case scenario is if Street leaves the channel,” he said. “I say if you’ve got a good relationship with the broker channel, don’t let it go because it can be your lifeline.”
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