Equitable Trust's interest in becoming a bank should not be seen as a move to reduce its reliance on mortgage brokers, said the monoline's president.
“Our potential is strengthened by our growing relationships with the country's mortgage brokers and the enhanced competitive position we now enjoy as a result of recent marketplace reaction to regulatory changes,” Andrew Moor told MortgageBrokerNews.ca. “These factors are leading more consumers to seek our product solutions. In short, all of the ingredients are in place for ongoing value creation.”
Mortgage brokers have provided Equitable its bread and butter, helping make it the second-largest alternative lender in Canada. But now Equitable is looking to spread its financial wings, after reporting a income increase for 2012 of 31 per cent to a record $81.2 million.
“In the longer term, operating as a bank will support the development of the business, promote efficiencies, appeal to a new generation of borrowers and depositors, and may provide advantages in raising capital,” reads a recently released earnings statement from Equitable. “Such a conversion would have no impact on Equitable's strong capital position or its current business model.”
The company’s current business model consists of single-family, non-prime mortgages and commercial lending.
Any transition from trust to bank will take on average two years, according to OSFI. For example, B2B Trust – the most recent trust-to-bank conversion – took two years from its initial application to achieve bank status.