Troubled Canadian Mortgage Provider Finds Buyer for C$1.5B Portfolio

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Depositors have withdrawn more than three-fourths from Home Capital’s high-interest savings account and the company has been charged by the regulator of misleading the investors.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.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza