Equitable CEO touts ‘sign of confidence’

HOME CAPITAL RIVAL BOLSTERS CREDIT TO REASSURE MARKET

Alternative mortgage lender Equitable

Group Inc. announced Monday that it has lined up $2 billion in standby credit in a bid to stem any contagion from troubled competitor Home Capital Group Inc., which continues to experience a partial run on its funding.

Equitable, which also released its first quarter earnings more than a week early, said Monday that it saw an "elevated but manageable” decrease in deposit balances of roughly $225 million between April 26 and April 28, representing 2.4 per cent of its total deposit base.

This decline followed Home Capital’s disclosure on April 26 that it was seeking a $2 billion emergency credit line to help mitigate a steep drop in its high interest rate savings deposits. On Monday, Home Capital said the balance of these deposits was expected to fall to $391 million after the settlement of Friday’s transactions, down from $1.4 billion a week ago.

Equitable Group president and chief executive Andrew Moor says after Home Capital’s shares plummeted 65 per cent on Wednesday — pulling Equitable’s shares down more than 31 per cent — their team began to reach out to the Big Six banks.

“We realized it might cause concern amongst investors…. We eventually got on the phone to the various banks we deal with and have great relationships with, to really try and buy us some insurance to assure the market that we were going to be in good shape,” Moor said in an interview.

Equitable said Monday it has obtained a letter of commitment for a two-year, $2 billion secured backstop from a syndicate of Canadian banks, including Toronto-Dominion Bank, Canadian Imperial Bank of Commerce and National Bank. See EQUITABLE on FP2