To bank or not to bank: Xceed weighs its options

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As it gets close to achieving its goals of developing prime lending, and managing its non-prime mortgages Xceed Mortgage Corporation is looking towards the future, forming a special committee to look at its options, which could include re-applying to become a bank, or even a sale or merger.

“The timeline on that roughly is that those securitization trusts wind up in the next six to 12 months. We’re nearing the completion of that,” said chief financial officer Jeff Bouganim. “These trusts represented a significant risk for the company, especially after the asset-backed commercial paper market collapsed.”

The independent board members would form a special committee to consider opportunities. Their objective would be to consider the strategic options available, with a view to maximising shareholder value.

The process is expected to take a number of months and brokers and clients will not be affected during the process, said Bouganim.

“There is no impact right now to the brokers and the broker community and certainly not for our clients. We are still active in the broker channel, we still have all our product offerings out there, our rates are still where they are.”

Xceed’s press release outlines three possible outcomes that might be considered by the committee: recommence its application to become a bank; seek out a sale, merger or other transaction involving the company and its assets; or return capital to its shareholders in a tax effective way.

Bouganim wouldn’t speculate on the factors that the committee would look at or how they would make their decisions.

“The broker community could certainly read those options and see that some could be very positive,” Bouganim told “We’ve already had a number of enquiries about whether we are becoming a bank. We don’t know, but that option might help quite dramatically with the brokers. Other options may be less good for the brokers. We won’t know until we know what the final conclusion is, but in the short term there is no impact for the clients and the brokers.

“Long term, under any scenario MCAP continues to be our servicer and the mortgages will continue to be serviced for our clients indefinitely, as need be. From a client facing capability and a broker facing capability there’s really no change.”

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