Home Capital says its deposits still falling
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.