Holy!! And more today.....over 3% | Oaken Financial | Discussion forum

Haven't seen those kind of rates in a while . How can they afford to pay out that interest7

Duca had an offer for 6 years at 3% last year. I think Home Capital can do better still given the situation. Long term rates like these still may not get much attention they need for getting money fast.
Personally, I think they should provide a rate of at least 3% on their high interest savings if they really want to keep or attract some lower cost capital while getting the money fast. That's the crowd they need right now to save them within the limits of the CDIC. Luminus Hi interest savings was at 3% last year + a few others who were pretty close.
Some people may keep money in a high interest savings account long enough if the rate stays for a few months to a year depending on how long they need help to solve problems. Home Capital can then turn around and lower the rates when the liquidity issue is resolved just as fast. Although there will be a lot of withdrawls out of the accounts at that point. I am surprised their management didn't think of this in February. They wouldn't have a lot of problems they are having now. But there is still a chance if they think this through....

The fact that HCG might get taken over by another unknown institution and that the new one might charge a transfer fee is not a good reason to not buy their GICs now. You are risking maybe $50 or so, which you can probably get reimbursed anyway, in order to get a substantially higher interest rate. Given the difference in rates between Oaken and most other FIs, it amounts to about a month's bonus interest on 100K.

Don't know if the rules for banks are different from the credit unions in Ontario, but at one time we had a great GIC rate a an Ontario credit union which was taken over by another Ontario credit union. Our GIC was terminated by the new company and all principal plus accrued interest was paid out to us. Obviously, at the time of takeover, they had the right to terminate what they considered to be unprofitable investments.

Could it have been possibly that the new company that terminated the existing GIC's and paid them out did so on the premise that most customers would not complain & think that was standard procedure?If a majority of clients didn't object it would be big bucks saved.

gicjunkie said
Don't know if the rules for banks are different from the credit unions in Ontario, but at one time we had a great GIC rate a an Ontario credit union which was taken over by another Ontario credit union. Our GIC was terminated by the new company and all principal plus accrued interest was paid out to us. Obviously, at the time of takeover, they had the right to terminate what they considered to be unprofitable investments.  

That doesn't sound like a takeover. More likely, the credit union ran into problems and DICO took control and shopped it around.

DICO probably found no-one interested in taking the whole credit union over, including the deposits and bad loans. In the end, DICO sold parts of the credit union (the good loans and maybe some of the branch leases) and got a big cheque from the other credit union for those parts.

DICO then issued a wind up order which terminated the deposit contracts and paid them out with the proceeds from the parts plus some funds to make up for the shortfall.

I agree with what Bill said. The acquirers are in the driver's seat because they can choose to bid for parts of the financial institution and not the entire institution.

My understanding is that CDIC and DICO are in the business of insuring deposits. Does anyone know if they even get involved in any other aspects of a failure, e.g. looking for buyers, organizing restructure, etc? I know that other financial institutions or maybe even government regulators (e.g. OFSI) might be involved in that case but I'm not clear whether or not CDIC and DICO would get involved in actions beyond their commonly-known mandate of insuring of lost deposits.