Money talks when trying to become a bank

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One of the major lenders in the mortgage broker space took a shortcut to receiving a Schedule I banking license through the purchase of an existing bank.

“Once the transaction closes we will withdraw our application for the bank license,” Gerald Soloway, chief executive officer of Home Trust told MortgageBrokerNews.ca. “It is still an active application at this point.”

Home Capital announced Monday that its subsidiary, Home Trust, will acquire CFF Bank – a Schedule I licensed bank. The purchase price is estimated at $15 million and would be aimed at acquiring all outstanding common shares in the bank.

The deal had many in the industry speculating that Home Trust – which currently has an application with OSFI for its own banking license – would withdraw that application.

Home Trust now has a schedule I banking license; they’ve bypassed years of work with the regulators to get it,” Roy Singh of Centum Discount Mortgage Canada told MortgageBrokerNews.ca. “Now with that license it makes it easier for them to access more capital.”

Home Trust will own 100 per cent of CFF Bank once the deal is finalized.

“The acquisition of CFF Bank represents a major step towards realizing our long-term plan to achieve greater funding diversification at Home Trust,” Soloway said in a release. “We look forward to welcoming to the Home Capital family CFF Bank’s customers and network of CFF Centre owners in Ontario, Manitoba, Saskatchewan, Alberta and British Columbia, as well as members of the CFF Bank staff.”

The deal is still pending shareholder and regulatory approval, but Soloway said the company is aiming to finalize the deal early fall.
 
  • Lender on 2015-08-13 9:53:04 AM

    I love how brokers who don't have a single clue on how things work, make comments!! @RoySingh what do you know about banking? When you are a Trust for you to become a bank takes less than a year! Look at Equitable Trust!

  • Broker on 2015-08-13 10:26:51 AM

    @Lender - Love when Lenders who think they know it all try to toot their own two horns. You mean Equitable BANK? Now off you go to get my submission approved, it's been 4 days already with no decision rendered yet! No wonder the turn around times for underwriting decison have soared!!!

  • Rick (Mortgage Mentor) Robertson on 2015-08-13 12:32:58 PM

    Along the lines of what "Lender" wrote - what annoys me is how several in this industry jump on news like it's an already done thing and in place now.

    Other recent examples are CMHC's 100% rent, and the Conservative's $35,000 RRSP for down payment. The CMHC in-home rental income program does not come into effect until late September and many of the Tweeters are missing the fact that it requires a min 680 Beacon and preferably 2 years track record of rental income. On the $35,000 RRSP item, when Mr. Harper is re-elected it still has to pass through parliament and may take a year or more to actually be used by anyone. Even at that, it seems to me to be a brilliant election hand-out because I suspect VERY FEW will actually wait to accumulate the higher amount and it will therefore affect Ottawa cash-flow next to nothing.

    Just because it's in MortgageBrokerNews.ca does not mean it's a fait acompli !!

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