Is Oaken Vulnerable: Home Capital Group | Page 7 | Oaken Financial | Discussion forum

Doug said

You're right, Norman, on the point about maybe customers just trimming their exposure to within their CDIC limits. We won't know that fine of detail.

One point of clarification, though, the website you cite is for their deposit broker-sourced HISA. The HISA balance figure cited by Home Capital Group of late includes that product as well as their direct-to-consumer "brand" Oaken Financial. The two HISA options are included within that figure. We don't know the particular "split" of the HISA withdrawals from the deposit broker-sourced deposits and Oaken Financial deposits. I'd assumed maybe the Oaken Financial deposits were leaving more quickly via customers' linked external accounts; however, it could be the deposit broker-sourced deposits leaving more quickly, as customers could simply instruct their deposit broker to transfer them into another HISA in nominee form through FundSERV. 🙂

Cheers,
Doug  

Hi Doug, most of Home's HISAs come from its broker platform. They don't have that much savings accounts on Oaken.

Doug said

That's likely true, since Oaken Financial is the newer platform, to diversify their funding sources. However, we don't know specifically what the "split" is but, in any event, if most of the redemptions are coming from the deposit broker-sourced deposits, that actually makes Oaken a potential opportunity to solidify its customer base as it means Oaken customers are, largely speaking, staying loyal. They could increase rates at Oaken to bring in more depositors. 🙂

Cheers,
Doug  

I think that they've increased their rates on savings accounts over the last week.

I think the board and the management has lost credibility already. They would rather go to Healthcare of Ontario Pension Plan (HOOPP) to have 2 billions at the cost of 20% interest (http://www.zerohedge.com/news/.....care-worke).

Why not lure more depositors directly with higher rate? Why always like to do backroom deal with the big guys? As a result, they suffered big loss on their equity value.

I am too very disappointed also.

I will go for it if 10%

Anyway, I am very tiny

Brimleychen said
I will go for it if 10%

Anyway, I am very tiny  

We may not be able to provide $2 billion in a few days. But, we can still help out.

I remember ordinary depositors deposited about $800 million in EQ Bank's Savings Plus account in less than six months. EQ Bank thought that they would be lucky if they attracted $200 million by the end of their first year.

I have 3 terms with oaken, single, joint , and informal trust
I called oaken today as one of my certificates didn't show the informal trust worded properly so they are sending me a new certificate. Glad I insured them properly as I went large.
Fingers crossed for oaken, they have been a good FI

Twotons said
I can't say I agree with the comments that HCG is a good FI if they lack the proper internal controls to identify bogus mortgage applications from 40 plus brokers, especially after the US sub prime feasco. IMO the management team was asleep at the wheel or just being greedy to book more business, in either case, not an FI I would like to do business with. …  

The OSC allegations against them suggest that the management trusted certain employees who let them down.

Project Trillium investigated and found some of Home Trust's most productive underwriters, who did the employment and income verifications, were so productive because they were "phantom ticking". They ticked applications as income/employment verified when, in fact, they did no actual verification. Many of those phantom ticked applications turned out to have falsified income and employment information.

Three underwriters were fired and one resigned.

They have since changed this. The OSC allegations mention that there is now a dedicated separate team that does just income and employment verifications.

The big banks used to have similar issues. Banks used to allow branch managers to pick the local appraisers for mortgage applications. It became known that if you wanted to be picked for the contract work, you would appraise the property for what the manager wanted so that the mortgage applicant would be approved for the mortgage desired.

Norman1 said

frank87 said
This might be one of the most amazing things I've seen in the business world. Home has a mortgage book with excellent credit quality, backed with very low LTVs. Their arrears rates are 0.24%. And yet, it seems like there's a degree of panic settling in with depositors who are INSURED on their money by CDIC, nevermind the fact that the company is well capitalized with a strong performing book.

Just shows the kind of mania that the human mind can conjure up.

I think the panic may have been from depositors not fully CDIC-insured because their financial advisor placed more of their money into Home Trust's High Interest Savings Account than was covered by CDIC.

I had a look into the Home Trust HISA. Pays just 1.00% per annum, with ¼% trailer to the advisor. Minimum $1,000 per account. Maximum $10 million per account!

May not have been massive withdrawals. Just massive trimming down to $100,000.  

This may be, but I am really scratching my head trying to understand why anyone would have significantly more than 100K with an advisor who then "invests" it at net .75%.
Seems to me that this sort of person might also be prone to other reckless moves such as taking all their money out in response to panicky news items. Once again, preying on the vulnerable.

Also, in regards to the stock market drop, which is most unfortunate, I imagine a lot of that is triggered by programs that dictate selling at a certain threshold. It could happen to any business, depending on the story that sets it off.

Good news..hopefully, the regulator steps in when the HISA balances reach near zero, otherwise this will drag on for months before the GIC deposit run forces a wind up.

And no, I do not have nor did I ever have an equity interest in HCG, I'm just happy to see this careless (and that is being kind) management team being cleared out by market forces. My faith in the markets is rejuvenated.