Home Cap­i­tal says its de­posits still falling

The Hamilton Spectator - - BUSINESS -

Home Cap­i­tal Group stock re­treated Wed­nes­day af­ter it dis­closed that de­posits to its sav­ings ac­counts con­tinue to dwin­dle as it tries to re­store in­vestor con­fi­dence.

The Toronto-based mort­gage lender said it ex­pected to have $134 mil­lion left in its high-in­ter­est sav­ings ac­counts as of Wed­nes­day, down just $12 mil­lion from the day be­fore but a sharp de­cline from $1.4 bil­lion just over two weeks ago.

The com­pany said to­tal GIC de­posits stood at $12.58 bil­lion as of Mon­day, down from $13.01 bil­lion as of April 24.

On the S&P/TSX com­pos­ite in­dex, Home Cap­i­tal shares were down seven per cent or 60 cents at $8.26 in early trad­ing. They recovered some of the losses later in the day, los­ing 10 cents to close at $8.76.

The stock jumped $2.03 or nearly 30 per cent on Tues­day af­ter HCG an­nounced an iden­ti­fied buyer is in­ter­ested in some of its mort­gage port­fo­lio.

Home Cap­i­tal said the ten­ta­tive non-bind­ing agree­ment could cover up to $1.5 bil­lion of its mort­gage as­sets, but it pro­vided no de­tail about how much cash it would get in re­turn or when it ex­pected a deal to be fi­nal­ized.

On Mon­day, Home Cap­i­tal said it drew $1.4 bil­lion from a $2-bil­lion emer­gency line of credit pro­vided late last month by the Health­care of On­tario Pen­sion Plan (HOOPP), one of On­tario’s largest pub­lic-sec­tor pen­sion funds.

In­vestors, reg­u­la­tors and gov­ern­ments are closely watch­ing the fate of the sub­prime mort­gage lender as some mar­ket ob­servers have ex­pressed fears its woes could un­der­mine the broader Cana­dian fi­nan­cial sec­tor.

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