Home Capital Group Inc (HCG.TO) said on Tuesday a third party intends to buy up to C$1.5 billion ($1.10 billion) in mortgages.
The third party has indicated its non-binding intention to buy as much as C$1 billion in uninsured mortgages and to buy, or accept, commitments for up to C$500 million in insured mortgages, the company said.
“This is another step forward in the company’s efforts to restore confidence in our operations,” Board Chair Brenda Eprile said in a statement.
Depositors have withdrawn more than three-fourths from Home Capital’s high-interest savings account and the company has been charged by the regulator of misleading the investors. The company expects the balance in its high-interest savings account (HISA) to fall to about C$146 million on Tuesday from C$192 million on Monday, it said.
Home Capital has become a rare Canadian financial institution to face a run on its deposits at a time when Ontario, Canada’s biggest province, has taken a series of measures to cool its red-hot housing market.
Canadian banks have enjoyed a stellar reputation and they dodged the global financial crisis by avoiding risky mortgages that sparked the collapse of many U.S. financial institutions.
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