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Auto lender Carfinco to become Santander Consumer Bank
An Alberta-based subsidiary of Spanish lender Banco Santander SA is seeking to obtain a Canadian banking licence after more than 20 years of helping finance consumer car purchases.
Carfinco Financial Group Inc. plans to file an application for a legal instrument incorporating “Santander Consumer Bank” in Canada, according to recent notices in the federal government’s newspaper.
Founded in 1997, Carfinco was bought by Santander in Sept. 2014 for about $298 million. The company bought loans made by car dealers, and said at the time it had 29,500 customers and a $278 million “principal balance of finance” as of the end of June 2014.
Carfinco currently offers “a portfolio of innovative products designed to allow consumers that may not qualify for bank or dealer finance programs to purchase new or previously owned vehicles,” its website says.
The company says it already operates in all 10 provinces, though not in Labrador.
Santander touts itself as the Eurozone’s biggest bank, with more than 200,000 employees serving around 144 million customers. Its 2018 annual report showed the lender had approximately 200 employees and 10 million euros in gross profit before tax in Canada.
A spokesperson for the Madrid-based bank said they had no comment “at this stage,” but added later that Carfinco is Santander’s only business in Canada and would be renamed Santander Consumer Bank.
Before having letters patent issued by Canada’s finance minister and commencing business with Santander Consumer Bank, Carfinco’s application would be reviewed by the Office of the Superintendent of Financial Institutions. The head office of the company would remain in Edmonton, according to the notice in the Canada Gazette.
The plans come after other European financial institutions have made further inroads in Canada.
HSBC Holdings Plc’s Canadian arm has become one of the bigger secondary players in the country, muscling into the mortgage market with rate specials.
Spanish retail lender CaixaBank SA also announced in December that it was opening a representative office in Toronto.
In doing so, the bank noted trade ties between Spain and Canada were “on the increase, making Canada an increasingly important trade partner for Spain.”
Spanish exports to Canada shot up by 10.5 per cent in 2017, while Spanish imports from Canada grew 30 per cent, CaixaBank said, citing data from the Spanish Institute for Foreign Trade.
The new office followed the striking of the Canada-European Union Comprehensive Economic and Trade Agreement (CETA), although Patrick Leblond, a senior fellow at the Centre for International Governance Innovation, said the free-trade deal did not offer much new for financial services.
“It doesn’t really provide anything special or new to European banks to do business within Canada,” Leblond said. “Sometimes CETA can have a benefit in terms of raising awareness, but I think in this case it’s probably just more business … opportunities that European banks might have identified in the Canadian market.”
Copyright Postmedia Network Inc., 2019