As the Canadian securitization market grows, Montreal-based Laurentian Bank of Canada, the country's seventh-largest bank, is looking to expand into mortgage-backed securities and other products, sources at the company said.
The bank recently completed its purchase of Toronto-based Sun Life Trust Co., an issuer of mortgage-backeds. With this acquisition, the bank can now expand its product line.
"We will now have facilities to do MBS," said Rejean Robitaille, treasurer at Laurentian.
"The way that Sun Life Trust did securitization, they used the MBS program," he said. "We haven't used that program yet. We did securitizations in the past using special vehicle conduits."
Mortgage loans in Sun Life's MBS program are fully-insured by the Canadian Mortgage and Housing Corp. (CMHC)while the mortgages that go into Laurentian's special-purpose conduits are conventional loans which are not insured.
Though Laurentian only securitized mortgages in the past, the company is looking for other possibilities.
"We are looking at other types of securitization in the future, probably for other products," said Robitaille. He predicts that the company will probably do two or three transactions this year, but that all "depends on the way we want to increase our funding or capitalization."
"We've become a bigger player," added Michael Murray, vice president of planning and investor relations.
"Let's just say that all the required capital is in place to acquire these assets and keep them on our balance sheets so we can choose to securitize or not if market conditions were right."