Lender invests in broker network

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One of Canada’s largest lenders has made an equity investment in one of the industry’s major broker networks which, according to the players involved, is a positive sign for the industry as a whole.

“Clearly this is a very positive sign for our industry. We all know that many of our Lenders rely on strong relationships with financial institutions as investors and funders,” John Kelly, chief operating officer for VERICO told MortgageBrokerNews.ca. “ The investment B2B Bank is making in VERICO Canada is in this context and provides us with more depth and resources to pursue our expansion plans in the coming years.”

Specific details of the deal have not yet been released but MortgageBrokerNews.ca spoke with Kelly for more on the investment.

CMP: What are the plans for the future, now that an influential backer has come on board?

Kelly:  VERICO Canada is committed to developing new and innovative opportunities for our Members. This means collaborating with our all of our lenders to construct and deliver new banking, insurance, and investment cross offers that differentiate and enhance our brokers’ value proposition to their customers. It’s a progressive evolution that will ultimately enable our brokers to broaden their business scope and profitability. The B2B Bank relationship is intended as a key and initial proof of concept on this strategy.

VERICO has just launched BRINCO Insurance to the network. This is also an important step in ensuring our brokers can expand their business to include life and property insurance in the future. The common objective is more points of profitable connection and relevancy with their customers.

CMP: What does it mean for the broker industry as a whole that a lender has chosen to put money back into this side of the business?

Kelly:  It’s no secret that the vast majority of the mortgages in Canada are manufactured by Canadian banks, trust and credit unions. Consequently the Broker channel, and most monoline lenders serving our channel, rely on these Banks to supply us with loan products. So I think almost all industry stakeholders would view any financial institution investment in the mortgage broker channel as a very positive outcome.

CMP: Are these sorts of partnerships going to be more common as the broker networks fights for market share with the big banks?

Kelly: I would think so. To compete and win in the future will require investment to drive the innovations that will deliver lasting advantages. It is very likely that there will be continued cross investments among and between banks, monolines, brokers, and national brands.

CMP: What role will B2B play in determining the future of Verico?

Kelly:  We intend to collaborate on certain niche product innovations with B2B Bank, but generally the future of VERICO will remain determined by our management team, namely Colin Dreyer, myself, and our National Advisory Council.

CMP: Will Verico brokers be given certain privileges when working with B2B?

Kelly: Of course. But I want to be very clear that the structure and nature of the relationship between VERICO and B2B Bank is merely financial. There is no locked in bias here, and B2B Bank will provide the same competitive mortgage products to all brokers in our industry. Similarly VERICO will continue to represent and promote the competitive mortgage and banking products of all of our other lenders. That being said, we do intend to develop niche products that deliver specific and exclusive advantages to our members.
  • Ron Butler on 2014-07-04 11:24:48 AM

    Congrats to the equity holders at VERICO corporate. A decade of hard work pays off in this liquidity event. The reward is very well deserved and very welcome I am sure. Based on the wonderful results lenders have enjoyed over the years buying into super brokers and broker networks the very best wishes to B2B as well.

  • race to the bottom on 2014-07-04 12:42:55 PM

    this is an interesting development, you wonder if this is the beginning of the banks gaining further control of the market and no better way than buying your way in and then making changes that will benefit the corp. If the right offer came to the principals of Verico its hard to think they wouldn't sell the remaining shares of the company.

  • John Kelly, COO VERICO Canada on 2014-07-04 2:44:22 PM

    Dear Race,

    I appreciate your insight and comment here. That fear is not unfounded, but I can offer some insight and comfort.

    I can tell you that over the past ten years "the right offer" has routinely crossed our desks every year to sell control of VERICO Canada.

    We said no emphatically each time then, and we said no with this investment decision.

    Why? Admittedly, not solely out of any misguided sense of satisfaction. But simply because VERICO Canada has always been a blue chip "buy and hold" for us. It remains that way today. We like the company, the people, and the business ;)

  • Angela Wong-Liao - Invis Inc on 2014-07-04 3:20:36 PM

    I am glad of the equity injection into Verico from B2B and it can potentially strengthen the base of the mortgage brokerage industry.

  • Cory on 2014-07-07 12:22:25 PM

    I see this as a step to having clients say "I am staying with my Broker", instead of "at my bank". This surely opens the door to the Verico Broker Community being able to more wholly service their client base. Those who chose to only Broker Mortgages will likely see little difference, those who chose to encompass more of the banking experience will likely see great opportunity. Congrats Verico for positioning your members for greater success!

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