Magazine article American Banker

Belgian Bank Deal Aims for No. 1 in Reverse Mortgages

Magazine article American Banker

Belgian Bank Deal Aims for No. 1 in Reverse Mortgages

Article excerpt

KBC Group NV, a Belgian banking company, has agreed to buy Vertical Lend Inc., a reverse mortgage lender, in a bid to use its capital markets capabilities to create one of the largest players in the field.

In an interview Wednesday, Gagan Sawhney, an executive vice president at KBC, said "most of the players" in the reverse-mortgage business, "other than one or two lead ones, do not have the capital markets expertise which is typically required to execute the transactions, both in terms of having the capital and ... the securitization expertise."

David Peskin, Vertical Lend's chief executive, said in the same interview that combining his Melville, N.Y., company's "marketing expertise, our market share ... [with] the financial backing and the creativity of the capital markets group at KBC" positions the U.S. company "to be No. 1 in the reverse mortgage market within the next two to three years."

However, the $452.6 billion-asset KBC would join other large financial institutions, including Countrywide Financial Corp. and Bank of America Corp., that have recently entered the reverse mortgage market.

Mr. Sawhney said his company, which runs a broker-dealer and an asset manager in New York, became interested in Vertical Lend in part because the reverse mortgage market is growing so fast, largely driven by the aging U.S. population.

The only reverse product Vertical Lend currently offers is the Home Equity Conversion Mortgage, which is insured by the government. …

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