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Home Capital sees 2nd-qtr loss on costs related to liquidity issue
June 29, 2017 / 11:30 AM / 3 months ago

Home Capital sees 2nd-qtr loss on costs related to liquidity issue

June 29 (Reuters) - Canadian lender Home Capital Group Inc said on Thursday it expects to record a loss in the second quarter due to costs related to its efforts to shore up liquidity.

The lender, which is expected to release second-quarter results on Aug. 2, said its expenses would increase by C$233 million ($179 million) before taxes, which includes C$210 million in costs related to the liquidity issue.

Depositors had withdrawn a majority of funds from Home Capital’s high interest savings accounts following the exit of former Chief Executive Martin Reid.

The company also settled with the Ontario Securities Commission earlier this month and accepted responsibility for misleading investors about problems with its mortgage underwriting procedures.

“The serious liquidity event that occurred late in April required the Company to take quick and dramatic steps, liquidating assets and arranging a rescue financing facility,” interim Chief Financial Officer Robert Blowes said.

Warren Buffett’s Berkshire Hathaway Inc said last week that it would provide a C$2 billion loan to Home Capital and take a 38 percent stake in the company.

Home Capital said on Thursday it received conditional listing approval from the Toronto Stock Exchange for Berkshire’s initial investment of C$153.2 million for a stake of about 20 percent. ($1 = 1.3009 Canadian dollars) (Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Saumyadeb Chakrabarty)

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