Don’t hold your breath about getting a bargain home loan from The Warehouse in the near future, although the company says that’s still on the agenda.
The discount retailer confirmed on Thursday that WestpacTrust is its partner in offering financial services to its customers. The two companies have formed a formal joint venture, The Warehouse Financial Services, initially capitalised at $5 million.
The new company will have its own board with four WestpacTrust and four Warehouse directors.
The first products, consumer credit and risk related products including basic cover insurances, should be on sale within six months both in The Warehouse’s 74 stores and through direct mail and over the phone.
WestpacTrust has already been the retailer’s partner since 1994 in its credit card operations which have about 200,000 customers.
Given that the two companies have already been working on the idea for months, Good Returns asked why such a delay before the first products are offered?
"We want the first products to market before Christmas. That’s still fairly rapid," says The Warehouse non-retail general manager and former E-Loans boss Bruce Gordon. "It takes time to get it right."
The Warehouse will look at home loans and other retail financial services, including savings and investment services, in the New Year, he says. The current proposal is "a low risk proposition" requiring only a small amount of capital which is another reason home loans won’t be offered immediately," Gordon says.
"Home loans require greater capital and are potentially greater risk. We need to understand that before we rush into it. With credit cards you can take corrective action on your book with some ease and it’s lower value per customer," he says.
It is "just coincidence" that the announcement came the same day as the government’s budget and isn’t anything to do with Deputy Prime Minister Jim Anderton’s plan to start a `people’s bank’ through New Zealand Post, he says.
Chief executive Greg Muir has previously said The Warehouse won't be competing head-to-head with the `people’s bank.’
Under the joint venture deal, WestpacTrust will provide most of the products, product management expertise and processing systems, infrastructure and risk/credit management. The Warehouse will provide its brands and retail outlets as marketing channels.
