{"id":23844,"date":"2017-05-01T20:11:01","date_gmt":"2017-05-02T01:11:01","guid":{"rendered":"http:\/\/olduvai.ca\/?p=23844"},"modified":"2017-05-01T20:11:01","modified_gmt":"2017-05-02T01:11:01","slug":"contagion-home-capital-bank-run-spreads-to-another-canadian-mortgage-lender","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=23844","title":{"rendered":"Contagion: Home Capital Bank Run Spreads To Another Canadian Mortgage Lender"},"content":{"rendered":"

Contagion: Home Capital Bank Run Spreads To Another Canadian Mortgage Lender<\/a><\/h3>\n
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As discussed first thing this morning<\/a>, the fate of Canada’s largest alternative mortgage lender, Home Capital Group, appears to have been decided over the weekend, when in the span of just one week, over 70% of the company’s deposit base had been withdrawn, effectively mothballing the business, leaving just a sale or liquidation as the two possible outcomes even as a $2 billion emergency line of credit keeps the company afloat, at least until HCG’s $12.8 billion in GICS mature some time over the next 30 to 60 days.<\/p>\n

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Predictably, the news of the ongoing bank run once again spooked shareholders, who sent its stock sliding by 10%, and wiping out two-thirds of the company’s market cap in under 2 weeks.<\/p>\n

A bigger red flag emerged when concerns about possible contagion appeared to have been justified Canada’s Equitable Group, another alternative mortgage lender, said Monday it had started seeing \u201can elevated but manageable\u201d decrease in deposit balances, traditionally a polite way by management to admit a bank jog is taking place<\/strong>. The company said that customers had withdrawn an average C$75 million each day between Wednesday and Friday, and while the withdrawals so far are modest, and represented 2.4% of the total deposit base, the recent HCG case study showed how quickly such a bank run could escalate. And while liquid assets remained at roughly C$1 billion after the outflows, the company also announced that it had taken out its own C$2 billion credit line with a group of Canadian banks, just in case the bank run was only getting started.<\/p>\n

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Having taken preemptive action, Equitable\u2019s loans terms were more favorable than Home Capital\u2019s, which as reported last week is paying an effective rate of 22.5% on the first half of the C$2 billion credit line that it tapped Monday from the Healthcare of Ontario Pension Plan.<\/div>\n<\/div>\n

…click on the above link to read the rest of the article…<\/p>\n<\/div>\n<\/section>\n","protected":false},"excerpt":{"rendered":"

Contagion: Home Capital Bank Run Spreads To Another Canadian Mortgage Lender As discussed first thing this morning, the fate of Canada’s largest alternative mortgage lender, Home Capital Group, appears to have been decided over the weekend, when in the span of just one week, over 70% of the company’s deposit base had been withdrawn, effectively […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[2086,61,103,15238,1992,7287,4318],"class_list":["post-23844","post","type-post","status-publish","format-standard","hentry","category-economics","tag-bank-run","tag-banking","tag-canada","tag-canadian-mortgages","tag-contagion","tag-home-capital-group","tag-zerohedge"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/23844","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=23844"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/23844\/revisions"}],"predecessor-version":[{"id":23845,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/23844\/revisions\/23845"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=23844"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=23844"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=23844"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}