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Is Oaken Vulnerable: Home Capital Group
April 20, 2017
9:37 am
Nehpets
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Home Capital Group is currently under OSC investigation and their stock has plunged.

Home Trust is a subsidiary of Home Capital Group, and the deposit arm of Home Trust is Oaken Financial or Home Bank.

Home Bank and Home Trust are members of CDIC.

How worried should I be about all my Oaken GIC's I bought last year at 2.75%?

April 20, 2017
9:58 am
Top It Up
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Well, since I have Home Trust GIC exposure in my RRSP (hmmm, just under the $100,000 CDIC), I too will be watching this story unfold.

April 20, 2017
10:00 am
2of3aintbad
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I also bought those 2.75% GICs for various terms. Unless you are over the $100K limit per account type, you / I should be 0 worried.

April 20, 2017
10:12 am
NorthernRaven
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Stock price doesn't necessarily mean "solvency danger"! Home may have some mortgages that aren't as well vetted as they thought. That, the fact that a chunk of their originations stream may now be gone, and general non-prime mortgage tightening may force them to rein in their balance sheet, or whatever. But there's a big gap between things like lower stock price or reduced dividends or whatever, and capitalization problems.

It doesn't sound like the OSC thinks it is an ongoing nest of snakes, just that it didn't properly handle disclosure of these 2-3 year old issues, which wasn't fair to stockholders.

April 20, 2017
10:56 am
AltaRed
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NorthernRaven said
Stock price doesn't necessarily mean "solvency danger"! Home may have some mortgages that aren't as well vetted as they thought. That, the fact that a chunk of their originations stream may now be gone, and general non-prime mortgage tightening may force them to rein in their balance sheet, or whatever. But there's a big gap between things like lower stock price or reduced dividends or whatever, and capitalization problems. 

Agreed, and regardless, that is what CDIC insurance is for. Nothing to worry about here folks.

April 20, 2017
11:32 am
Brimleychen
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AltaRed said

NorthernRaven said
Stock price doesn't necessarily mean "solvency danger"! Home may have some mortgages that aren't as well vetted as they thought. That, the fact that a chunk of their originations stream may now be gone, and general non-prime mortgage tightening may force them to rein in their balance sheet, or whatever. But there's a big gap between things like lower stock price or reduced dividends or whatever, and capitalization problems. 

Agreed, and regardless, that is what CDIC insurance is for. Nothing to worry about here folks.  

Agreed. But I will expect them to raise the rate a bit more for the compensation of the big mess when renewal.sf-embarassed

April 20, 2017
12:26 pm
AltaRed
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Surely you jest? They may lower their rates because they may not be writing as many mortgages.

April 20, 2017
1:35 pm
Nehpets
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AltaRed said
Surely you jest? They may lower their rates because they may not be writing as many mortgages.  

This is from today's (April 20, 2017) Oaken blast email:

As part of our commitment to making customers the first to know about our rate changes, please note that effective Friday, April 21, 2017, we'll be increasing our interest rates for the following terms:
1 Year GIC - 1.85% (currently 1.75%)

18 Month GIC - 1.95% (currently 1.85%)
2 Year GIC - 2.00% (currently 1.95%)
These new rates will be applied automatically for all GICs booked on April 14, 2017 or later.

April 20, 2017
1:46 pm
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Very quick response from Oaken ... didn't wait a single moment to see which way the winds blow OR wait on what some PR firm had for advice on handling the situation.

April 20, 2017
2:27 pm
Loonie
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Those 1-2 year rates were not competitive anyway. This rise may hav been already in the works.

April 20, 2017
4:36 pm
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Since most people can't get at Street Capital, Oaken has always been competitive on the 18month & 2-year rates - they are now just 5bps off the top.

Too bad that institutions get crapped on when they raise their rates.

April 20, 2017
4:51 pm
AltaRed
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Top It Up said
Too bad that institutions get crapped on when they raise their rates.  

How so? Institutions raise their rates only if they need to do so to attract deposits of a term necessary to match the other side of the ledger. It might be for good reasons, e.g. writing more loans of a specified term, or for bad reasons, e.g. to compenstate for 'lower' financial stability and/or reputation.

April 20, 2017
5:18 pm
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AltaRed said

How so?  

The response was to comment #10.

April 20, 2017
10:18 pm
Loonie
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1.75% on one year is not competitive, and neither is the new "improved" rate at 1.85. You can get 2.05 at Hubert, and it's cashable.
2.2 has been available for 18 months recently while Oaken languished.

And, as has been admitted, you can do better elsewhere for 2 years as well.

Speaks for itself. No crap or inflammatory language required.

April 21, 2017
4:54 am
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You seem to be a little out-of-touch with both rates and terms

From Hubert

ONLY the 1-year is not locked and "you’ll [only] earn an average rate of 2.05% for the year (with compounded interest)" IF NOT redeemed

"Any lasting happiness term deposits you purchase after January 15, 2016 are not eligible for early redemption."

"Any TFSA term deposits you purchase after January 15, 2016 are not eligible for early redemption."

"Any RRSP or RRIF term deposits you purchase after January 15, 2016 are not eligible for early redemption."

EDIT: Hubert dropped their 1-year rate this morning.

April 21, 2017
7:54 am
Bill
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I think we can agree that Oaken rates are competitive, they are consistently near the top when all institutions are considered, but they are usually not the highest.

April 21, 2017
1:32 pm
dentgal
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Although you guys seem calm, i'm a bit nervous:
here's the latest email received from Oaken:

Friday, April 21, 2017

As you may be aware, our parent company, Home Capital Group Inc. has been in the news lately. While these are important issues, we want to assure you that it’s business as usual at Oaken.

As an Oaken customer, you continue to have an experienced team working to help you achieve your financial goals, backed by a financially strong institution. Home Capital is very profitable, and as Kevin Smith, Chair of the Board for Home Capital and Home Trust, said in a press release Friday, the company is extremely well capitalized with solid capital ratios that signify a strong balance sheet. The Company plans to report full results as scheduled on May 3.

I, together with the entire Oaken team, remain dedicated to helping each and every one of our customers.

If you have any questions or require any assistance with your Oaken account, please contact one of our friendly customer service representatives at 1-855-OAKEN-22 (625-3622).

Best regards,

Benjy Katchen
Executive Vice President,
Deposits and Consumer Lending

April 21, 2017
1:40 pm
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Your level of angst should be directly proportional to your level of exposure to the institution i.e. are you over or under the CDIC limit?

April 21, 2017
5:36 pm
dentgal
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Top it up:
i'm under the limit, but apparently it is a huge and prolonged process to get your money back from the government--or that is what i've read here on the forum.

April 21, 2017
5:45 pm
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Hard to determine the length of the process but, I read this, for what it's worth.

GET THE MONEY BACK

If a bank can’t be saved and goes under, CDIC would automatically refund eligible deposits to its customers with the amount that was in their account when the bank closed.

It would take “a matter of days,” says Evenson, the corporation’s director of communications and public affairs, for Canadians to receive their cheques, which they would then be free to cash at another financial institution.

Don't forget, this is an anonymous forum with probably NO ONE actually having gone through the process directly - they'll just be sharing nothing more than urban myths.

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