Toronto-based Home Trust Company, a wholly owned subsidiary of Home Capital Group Inc. (TSX:HCG) Monday announced that it intends to apply to the federal Minister of Finance for a Schedule I bank charter.
The proposed bank, which would be called Home Trust Bank in English, and Banque Home Trust in French, would be a wholly owned subsidiary of Home Trust.
Forming a bank subsidiary would give Home Trust greater strategic flexibility in the long run.
“The main purpose of applying for the bank charter right now is to help us grow and diversify our deposit base,” said Gerald Soloway, CEO of Home Trust and Home Capital. “We have been very successful with our Oaken Financial branded deposit products and the bank would support and carry that initiative forward.”
Home Trust has traditionally relied primarily upon deposit broker relationships for its funding and will continue to do so. The Oaken Financial products, which are targeted mainly at the direct consumer and small business market, would be carried on by the bank as a separate business. “We see this as a great way to build on the growth potential of our overall business and to continue to build value in Home Capital,” said Soloway.
Home Trust published notice of its intention to apply for a Schedule I bank charter in the Canada Gazette on Nov. 8. Once the official notice period is over, the Office of the Superintendent of Financial Institutions (OSFI) will review the application and make a recommendation to the Minister of Finance. The receipt by OSFI of an application is not an indication that the application will be successful.