True North Mortgage moves toward opening its own bank
True North Mortgage Inc., a Calgary-headquartered independent mortgage broker, has taken a step toward opening a bank of its own.
According to a recent notice in the Canada Gazette, the federal government’s official newspaper, True North plans to apply to the Minister of Finance for the letters patent needed to incorporate a Canadian bank.
The proposed bank would be named Think Bank, and it would provide “consumer retail and mortgage services to Canadian residents,” the notice said.
“The granting of letters patent will be dependent upon the normal Bank Act application review process and the discretion of the Minister of Finance,” it added.
True North opened its first store in 2006 and it has 11 locations in Alberta, British Columbia, Ontario, Quebec and Nova Scotia. According to its LinkedIn page, True North has between 51 and 200 employees.
In an email, the head of the company said they had applied for but not received the letters patent, and anticipated opening the new bank in either 2019 or 2020. The specific launch date will depend on the lender receiving the required regulatory approvals.
“We are looking to create a Bank which will be a wholly owned subsidiary of TNM that can support the launching of a few unique products,” said Dan Eisner, True North’s founder and chief executive. “The Bank will not be publicly traded and will support our mission to provide really low mortgage rates to good credit Canadians.”
True North’s website says it “works closely with both large public banks and small private trust companies” to help its customers find financing. “In short, we match you with the best lender for your needs,” it adds.
The privately held firm has been an “approved lender” under Canada’s National Housing Act since 2016, which allows True North to underwrite Canada Mortgage and Housing Corp.-insured loans for residential properties of one to four units. The company’s Think Financial brand offers mortgages exclusively through True North.
Eisner said True North would remain the approved lender even after the bank is launched, as their current plan does not include the bank funding insured mortgages.
According to the Office of the Superintendent of Financial Institutions (OSFI), Canada’s federal banking regulator, applicants trying to create a federally regulated financial institution must apply to the government for the legal instrument that allows them to do so, the letters patent.
OSFI judges the application — assessing an applicant’s business plan and financial resources, among other things — and makes recommendations to the finance minister.
The finance minister will then decide whether or not to issue the letters patent, after which the would-be bank must still obtain an order to commence and carry on business that would have to be issued by the superintendent. Before that order is given, OSFI says it must be “satisfied” that the financial institution has all the necessary systems, structures and controls in place.