Billionaire financier Stephen Smith is merging recently acquired Home Trust Co. with Fairstone Bank of Canada in a deal he values at about $5-billion to $6-billion.
The lenders provide subprime lending to customers who typically would not qualify for loans at a bigger bank, such as business entrepreneurs, self-employed workers, and new immigrants who have yet to build a credit score. Initially, Mr. Smith had said that he intended on keeping Home Trust as a stand-alone company. Over the past year, the lender hit Mr. Smith’s financial targets – including profit and net interest margins, or the difference between the amount the lenders charge for loans and pay on deposits – faster than expected, prompting him and Fairstone’s shareholders to consider merging the two banks.