(Recasts with plans to form bank)
TORONTO, March 12 (Reuters) - Xceed Mortgage Corp XMC.TO said on Thursday it wants to transform into a bank and has had preliminary talks with the Canadian regulator, the Office of the Superintendent of Financial Institutions, about its intention to do so.
Xceed Mortgage’s comments came as the company reported a higher quarterly profit due to the restructuring of Canada’s asset-backed commercial paper market.
The company, a provider of insured mortgages, said it is optimistic that it will receive the necessary approval from the Canada’s minister of finance to carry on as a Schedule I bank even though it has not received any assurances from OSFI.
A Schedule I bank in Canada is one that is authorized to accept deposits that are eligible for deposit insurance.
The company said changes in capital markets over the past two years led to its intention to apply for status as a federally regulated Schedule I bank under the Bank Act.
“We believe that forming a deposit-taking financial institution will provide Xceed with another important means of raising stable capital at a reasonable cost that we can deploy productively for Canadians, particularly for originating new mortgages and renewing existing ones,” Xceed Mortgage Chief Executive Ivan Wahl said in a statement.
Xceed Mortgage, which has about C$2.1 billion ($1.6 billion) of mortgages and other assets under administration, said there is sizable underserved demand for mortgage financing in Canada.
In its first quarter ended Jan. 31, Xceed Mortgage said it had a net profit of C$3.3 million, or 12 Canadian cents a share, up from a profit of C$1.5 million, or 5 Canadian cents a share, in the year-before period.
The bulk of its higher profit came from a C$4.8 million payment delivered under January’s asset-backed commercial paper restructuring agreement.
$1=$1.29 Canadian Reporting by Frank Pingue; Additional reporting by Ashutosh Joshi in Bangalore; Editing by Peter Galloway