HFC’s firm grip on mortgage attracted us – Republic Bank
The country’s mortgage market is set to witness substantial inflows of foreign capital and expertise following the partnership between HFC Bank and the Republic Bank of Trinidad and Tobago (RBTT).
The Republic Bank, which is one of the largest financial institutions in the Caribbean Region, has already invested some US$40 million in HFC Bank and is now aiming at helping the bank to expand its reach, especially in the mortgage business.
The local mortgage market is currently underdeveloped owing to less capital inflows and limited expertise despite the consistent rise in demand for homes over the past few years.
That notwithstanding, HFC Bank, which started operations as a home finance company, now has a firm grip on the area, having dominated the market for ages.
The Republic Bank, which is HFC’s new majority shareholders, sees this as a good business opportunity that can be exploited for the mutual benefit of the two institutions and the country at large.
Its Managing Director, Mr David Dulal-Whiteway, told the GRAPHIC BUSINESS in Accra that although his outfit was looking at using the partnership with HFC Bank to tap into the various investment avenues available in the country, particular interest would be paid to the mortgage market, an area that is intertwined with the general business portfolio of banks across the globe.
“If you help a customer with a mortgage to buy a home, that customer will now be looking for furniture, home theatre systems, a car and all that and these are things the bank can easily fund,” Mr Dulal-Whiteway said in an interview on September 24, 2013
With HFC controlling a substantial amount of market share in the mortgage business, Mr Dulal-Whiteway said partnering with it was the best decision to have been taken, given that it would provide Republic Bank, which has an equally wider expertise in the area within an opportunity to grow that portfolio in the country.
“We believe in culture and always look out for partners that have the same cultures as we do. In fact, there were a number of banks that approached us but we realised that HFC has a strong root in the mortgage area having started as a home finance company and that was what caused us to opt for them,” the MD said.
Taking over HFC
Earlier this year, RBTT raised its stake in HFC from 8.8 per cent to 32.02 per cent and later to 40 per cent.
That was after it had bought the Aeros Fund out of HFC and also acquired an additional 7.98 per cent from Union Bank.
Given that the bank’s current stake in HFC, a listed bank, is above the mandatory takeover point of 30 per cent for listed companies, the bank was mandated by the country’s Code of Mergers and Takeovers to make an offer to buy out all other shareholders of HFC.
However, the bank declined to exercise that right but instead, applied for a waiver from the Securities and Exchange Commission (SEC) to be exempted from that law; a request the SEC turned down.
SEC’s action caused the Bank of Ghana (BoG), which regulates the financial sector, to intervene with a call on it to withhold Republic Bank’s request for the waiver.
It is not clear what the SEC will say on BoG’s plea but its Director-General, Mr Adu Anane Antwi, told the GRAPHIC BUSINESS on September 25 that the commission will soon announce its stance on the matter.
“We are yet to take a decision but as it is now, anything can be possible,” Mr Anane said.
Republic Bank’s MD, however, reiterated his outfit’s intentions not to takeover HFC, explaining that Republic was interested in supporting HFC to grow rather than rebranding it.
“We are interested in maintaining local content and there’s nothing in our minds like change of name. Even if HFC comes back to us for more capital (to enable them to meet new recapitalisation directives), we will give them but we will not rebrand the bank,” Mr Dulal-Whiteway said.
“We are a long term player and not preoccupied with how much we own,” he added.
He also denounced speculations that the Republic Bank was planning to set up in the country, saying “whatever we do in Ghana will be done through HFC.”
By Maxwell Adombila Akalaare/Graphic Business/Ghana