One of Canada’s largest mortgage brokerages, True North Mortgage Inc., has applied for a licence to open a bank in a bid to expand its range of products.
The Calgary-based brokerage, which opened in 1999, is planning to create a wholly owned subsidiary called Think Bank to offer certain retail-banking and mortgage services, and intends to launch the new company either this year or in 2020, subject to approval from regulators.
The new bank is intended to “support the launching of a few unique products,” Dan Eisner, chief executive officer at True North, said in an e-mail. He declined to discuss detailed plans for the bank while the proposal is still before regulators. But the company’s decision to pursue a banking licence comes at a moment when new federal regulations have cooled activity in housing markets in Canada’s largest cities, and competition among lenders to raise deposits and drum up new business has grown more intense.
True North’s primary business is providing residential mortgages to borrowers with fairly good credit, with locations in major cities from Vancouver to Halifax. The company brokered nearly $1.5-billion in mortgages in 2018, about half of them through its existing subsidiary, Think Financial.
A banking licence would give True North the ability to raise deposits through Think Bank, by offering products such as guaranteed investment certificates, or GICs, which could then be used to fund mortgage loans. That could put Think Bank in more direct competition with established alternative lenders such as Home Capital Group Inc. and Equitable Bank, which lend mostly to customers who don’t fit every traditional measure of creditworthiness.
If licensed, Think Bank would be federally regulated and privately held, with its headquarters in Calgary. A notice signalling True North’s intention to apply to the Minister of Finance for a banking licence was made public on Dec. 22.
True North has not yet received letters patent to incorporate the new bank, and must also secure a green light from Canada’s banking regulator, the Office of the Superintendent of Financial Institutions. “Our specific launch date remains flexible,” Mr. Eisner said.