How has the funding position changed at Castle Trust? If it hasn’t, why the application for a banking licence and the exodus of people from the lender?
There are separate questions here, so it’s worth tackling each separately.
Our funding position at Castle Trust hasn’t changed, but we do have an appetite to grow our lending business. As part of developing our plans to deliver robust and sustainable growth, it was only sensible to review how to best to fund that increased lending.
We applied for a banking licence as it would give us is more diversity in our funding and this is something that any forward-thinking lender should be looking to achieve.
There have been a number of personnel changes in recent months, including a couple of high profile departures.
If you are a successful lender, other businesses will always want to replicate your success and so some of our people have been offered really attractive roles. That’s life and, in many ways, it is a form of flattery as it says that others want to emulate our business.
However, while we have said goodbye to some colleagues, we have also made important appointments, including our new CEO, Martin Bischoff, who is already bringing a new perspective to Castle Trust.
We also have fantastic people, with a wealth of expertise, throughout the business and this combination of sector experience and fresh thinking is really exciting.
Castle Trust is going for a banking licence. Which sectors will you be targeting and is regulated residential on the list?
We don’t plan to change direction with our lending. We have identified what we do best, and we will continue to deliver and enhance our offering of bridging and medium-term finance for property investors, entrepreneurs and high net worth individuals.
It’s a competitive market, but there is still lots of opportunity out there. At Castle Trust we offer sensible solutions to complex situations and I think most brokers will agree that they are seeing an increasing number of clients with complex situations.
Unlike many lenders, we have the ability to structure a loan where the interest on a proportion of the balance is rolled up and the rest is serviced. This is a really powerful tool that brokers can use to solve difficult cases.
Can you offer an example of a banking model the post-licence structure will resemble?
We are not in the market to copy other businesses – we don’t need to. We believe that, if Castle Trust were to become a bank, we would be in a strong position as we already have a track record of holding customer money and a successful lending business.
Delivering an operational and customer-focused combination of these functions should not be under-estimated. It requires a huge amount of experience and expertise and we are fortunate enough to already have these in abundance within the organisation.
Are you going to recalibrate your broker relationships?
We have no plans to overhaul our broker relationships, but we are always looking at ways of making life easier for brokers by making our processes more streamlined and straight-forward.
Those people who have long enough memories to remember my GMAC days, will know that speed and transparency are in my DNA and this is influencing the way we evolve at Castle Trust.
Earlier this year, we launched our instant quote calculator on first and second charge loans, which has had a dual benefit for brokers as it provides a slicker journey and also gives our underwriters more capacity to deliver a fast turnaround on larger loans. We can lend up to £25m.
Which under exploited niches will you be targeting?
We will continue to focus on our core areas to identify areas where borrowers are underserved and brokers need sensible solutions to complex situations.
With so much change in buy to let, we think a growing number of landlords will look to alternative types of investment like HMOs, multi-units, holiday lets and student accommodation as ways of generating better yields.
We also anticipate more appetite from entrepreneurs who want to tap into the equity in their property to invest in their business – nearly 200,000 new businesses were started in the first four months of this year alone, according to StartUp Britian.
In addition, the demand for development funding will only continue to rise as smaller developers are being encouraged to help solve our housing shortage, so there is plenty of opportunity.