New non-bank deposit taker to court advisor networks
The first company to be granted a non-bank deposit taker license by the Reserve Bank in nearly a decade says it will look to build strategic partnerships with advisor networks as it develops the lending side of its business.
Tuesday, January 14th 2025, 1:36PM
by Kim Savage
The first company to be granted a non-bank deposit taker license by the Reserve Bank in nearly a decade says it will look to build strategic partnerships with advisor networks as it develops the lending side of its business.
Welcome Limited had its NBDT licence application approved by the RBNZ last week and hopes to begin offering secured term deposits out to five years from the second quarter of this year, which together with existing equity capital, will fund the company’s mortgage finance offering.
Welcome’s chief executive Anton Douglas says the company is not looking to set up a shop front for lending and will work closely with advisors.
“They are experts in what they do and that’s the best place for us to engage with the borrower, and it's better for the borrowers as well.”
Douglas is a former Credit Suisse senior executive and on his return to New Zealand in 2017, was CEO of non-bank lender Midlands Funds Management. Tracey Jones chairs the Welcome board, with Sarah Smith and Hamish Frame joining as directors.
Douglas says the company will be able to offer better deposit rates than banks, more solutions at a lower cost for borrowers, and has advantages over other options in the market for investors.
“Having capital in the business is an important factor, because it sits there, it's subordinated to depositors, meaning it absorbs any loss prior to deposit takers or any downturn.
“And that's something that the mortgage funds in particular, and other wholesale investments don't have.”
The business model is seen by some as challenging because of the amount of capital required, says Douglas, but now feels like the right time to enter the NBDT space, with the company likely to be eligible for the Depositor Compensation Scheme when it comes into effect midway through 2025.
“We're only doing first ranking mortgages, so we don't do personal loans or autos or anything of that nature. So we're pretty vanilla on that front.
“The sector has moved on a long way from where it was at and this helps to build trust in that space,” says Douglas.
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