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Email this11:19 am
December 17, 2016
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frank87 said
The chances of HCG going under and CDIC having to intervene is very, very unlikely.
Hmmmm ... are you green-lighting me to invest in excess of CDIC limits? that all's well in HCG land?
I'll take a pass, but thanks anyway.
12:10 pm
December 12, 2009
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Twotons said
Now, I'm not Kreskin, but I see another thread closer coming very soon...
I would welcome this thread being closed. 🙂
This has turned into a thread on stock prognostication and speculation by unnamed, anonymous persons with questionable or, at a minimum, unidentified motives.
It's one thing to ask, especially for forum "newbies," about whether one's deposits are safe and then for this forum's great, helpful members (i.e., Loonie, Peter, NorthernRaven, Norman1, Rick, Deb or myself - and others!) explaining how CDIC works, how unlikely it would be that the CDIC regime would even need to be tapped, that this is a problem of liquidity/loss of depositor & investor sentiment than an issue with solvency (their mortgage book is incredibly solid with one of the lowest delinquency rates in the industry, for instance). It's quite another to post, frankly, salacious headlines like "is Company A vulnerable?" and then ask loaded questions to which one clearly knows the answer and then have a bunch of quite likely speculators pile in. 🙁
Cheers,
Doug
12:18 pm
December 12, 2009
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Top It Up said
Hmmmm ... are you green-lighting me to invest in excess of CDIC limits? that all's well in HCG land?
I'll take a pass, but thanks anyway.
Investing in HCG stock is not CDIC-insured.
If you're meaning deposits with either Home Trust or Home Bank, my answer would be emphatically yes. To me, the interest rates on the GICs need to be about 25-50 bps higher and then I'd go "all in" in terms of deposits, absolutely, because, quite frankly, even if HCG sells its regulated banking subsidiaries or OSFI arranges a marriage with a larger entity, that does not affect CDIC limits as the CDIC deposit regime would not be tapped.
The chance of CDIC deposit regime being tapped is about 0.0000000000001% - in even the least likely scenario, OSFI (not CDIC) arranges a marriage/merger of Home Trust and Home Bank into another regulated bank (or even a large credit union/caisse populaire - don't rule out Desjardins, either! :)), who would take on its entire mortgage and deposit book.
Even before CDIC would be tapped, CDIC even has the power to step in and run the business in a sort of "conservatorship," including all of its deposits and mortgages, which it would essentially run-off and they would likely put temporary capital into the business to make up any shortfall in deposits while the mortgage book runs off.
Lots and lots of options!
Cheers,
Doug
12:34 pm
December 17, 2016
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Doug said
If you're meaning deposits with either Home Trust or Home Bank, my answer would be emphatically yes. To me, the interest rates on the GICs need to be about 25-50 bps higher and then I'd go "all in" in terms of deposits, absolutely, because, quite frankly, even if HCG sells its regulated banking subsidiaries or OSFI arranges a marriage with a larger entity, that does not affect CDIC limits as the CDIC deposit regime would not be tapped.
The chance of CDIC deposit regime being tapped is about 0.0000000000001% - in even the least likely scenario, OSFI (not CDIC) arranges a marriage/merger of Home Trust and Home Bank into another regulated bank (or even a large credit union/caisse populaire - don't rule out Desjardins, either! :)), who would take on its entire mortgage and deposit book.
Lots and lots of options!
Nothing more than anonymous opinion, bluster, and bravado.
A National Post article tells us how and why HCG is in the mortgage business -
Along with its wholly owned subsidiary, Home Trust Inc., Home Capital aimed to provide mortgages to those who didn’t qualify for traditional bank loans — to borrowers were self-employed or had once been bankrupt, or had no credit history.
What's changed that all of a sudden the BIG banks would have an interest in HCG's book?
-----------------------------------------
If HCG was as stable as suggested by some forum members, maybe they could explain the necessity for all this? Again, from the National Post
This week, the fallout came to a head when Home Capital said deposits had dropped by nearly $600 million between March 28 and April 24, and it needed to secure a $2 billion lifeline to mitigate the impact.
It did secure one in the end, from a syndicate of lenders including the Healthcare of Ontario Pension Plan — but at an onerous rate that analysts pegged at a 22.5 per cent effective interest rate for the first $1-billion.
To that end, Home Capital has said the terms of the loan agreement would have a “material impact on earnings” and it would not be able to meet its previously announced financial targets.
It has retained RBC Capital Markets and BMO Capital Markets to “advise on further financing and strategic options” as analysts said a runoff or sale of the company was a growing possibility.
12:35 pm
October 21, 2016
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The future doesn't look too bright for HCG, but I see a bigger problem.
HCG has about $11-billion of non-prime mortgages that will be due for renewal over the next few years. If HCG goes under, who will renew all those mortgages as the majority of them are mortgages that the big banks didn't want to touch?
12:50 pm
April 28, 2017
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Doug said
If you're meaning deposits with either Home Trust or Home Bank, my answer would be emphatically yes. To me, the interest rates on the GICs need to be about 25-50 bps higher and then I'd go "all in" in terms of deposits, absolutely, because, quite frankly, even if HCG sells its regulated banking subsidiaries or OSFI arranges a marriage with a larger entity, that does not affect CDIC limits as the CDIC deposit regime would not be tapped.
The chance of CDIC deposit regime being tapped is about 0.0000000000001% - in even the least likely scenario, OSFI (not CDIC) arranges a marriage/merger of Home Trust and Home Bank into another regulated bank (or even a large credit union/caisse populaire - don't rule out Desjardins, either! :)), who would take on its entire mortgage and deposit book.
Lots and lots of options!
Cheers,
Doug
Hear, hear Doug.
You are echoing my sentiments and opinion as I posted; I can only imagine the mad rush to marry and remarry HCG with GICs offered at 25 bps over 3%....
3:38 pm
April 22, 2017
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Top It Up said
Doug said
If you're meaning deposits with either Home Trust or Home Bank, my answer would be emphatically yes. To me, the interest rates on the GICs need to be about 25-50 bps higher and then I'd go "all in" in terms of deposits, absolutely, because, quite frankly, even if HCG sells its regulated banking subsidiaries or OSFI arranges a marriage with a larger entity, that does not affect CDIC limits as the CDIC deposit regime would not be tapped.
The chance of CDIC deposit regime being tapped is about 0.0000000000001% - in even the least likely scenario, OSFI (not CDIC) arranges a marriage/merger of Home Trust and Home Bank into another regulated bank (or even a large credit union/caisse populaire - don't rule out Desjardins, either! :)), who would take on its entire mortgage and deposit book.
Lots and lots of options!
Nothing more than anonymous opinion, bluster, and bravado.
A National Post article tells us how and why HCG is in the mortgage business -
Along with its wholly owned subsidiary, Home Trust Inc., Home Capital aimed to provide mortgages to those who didn’t qualify for traditional bank loans — to borrowers were self-employed or had once been bankrupt, or had no credit history.
What's changed that all of a sudden the BIG banks would have an interest in HCG's book?
-----------------------------------------
If HCG was as stable as suggested by some forum members, maybe they could explain the necessity for all this? Again, from the National Post
This week, the fallout came to a head when Home Capital said deposits had dropped by nearly $600 million between March 28 and April 24, and it needed to secure a $2 billion lifeline to mitigate the impact.
It did secure one in the end, from a syndicate of lenders including the Healthcare of Ontario Pension Plan — but at an onerous rate that analysts pegged at a 22.5 per cent effective interest rate for the first $1-billion.
To that end, Home Capital has said the terms of the loan agreement would have a “material impact on earnings” and it would not be able to meet its previously announced financial targets.
It has retained RBC Capital Markets and BMO Capital Markets to “advise on further financing and strategic options” as analysts said a runoff or sale of the company was a growing possibility.
It's very easy to label something and misconstrue what it actually is. It's too easy to paint things in black and white terms.
Yes, Home does take customers that the Big Banks don't. But that doesn't make them bad credits. The Big Banks underwrite using an auto-adjudicated process and refuse anyone who falls out of the box that a computer program sets forth. And a lot of people do.
If you really want to know the quality of their underwriting and their degree of conservatism, take a look at their non performing loans and credit losses over time. Take a look at the amount of equity that back these mortgages. And take a look at how well they're capitalized - even compared to the Big Banks.
3:40 pm
April 22, 2017
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JustMe2016 said
The future doesn't look too bright for HCG, but I see a bigger problem.HCG has about $11-billion of non-prime mortgages that will be due for renewal over the next few years. If HCG goes under, who will renew all those mortgages as the majority of them are mortgages that the big banks didn't want to touch?
OSFI understands this very well. Which is why they're high highly unlikely to let HCG go under, especially when their loan book is strong.
3:51 pm
December 17, 2016
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frank87 said
Take a look at the amount of equity that back these mortgages. And take a look at how well they're capitalized - even compared to the Big Banks.
From earlier
Key for Home Capital in the coming weeks is whether it can continue to get savers to buy its broker GICs, which comprise some 70 per cent of its non-securitized funding.
If the funding channel dries up, there is no other source of funding that can take its place,” said Rizvanovic, noting that 52 per cent of those GICs are due to mature in a year.
3:58 pm
May 15, 2007
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I have now closed this thread. Clearly there are different opinions, but people are unnecessarily repeating themselves at this point. If there is something additional and specific to discuss about Oaken, please open new threads.
Please write your comments in the forum.