Is Oaken Vulnerable: Home Capital Group | Page 9 | Oaken Financial | Discussion forum

Please consider registering
guest

sp_LogInOut Log In sp_Registration Register

Register | Lost password?
Advanced Search

— Forum Scope —




— Match —





— Forum Options —





Minimum search word length is 3 characters - maximum search word length is 84 characters

This topic is locked No permission to create posts
sp_Feed Topic RSS sp_TopicIcon
Is Oaken Vulnerable: Home Capital Group
April 29, 2017
11:19 am
Top It Up
Member
Members (temp break)
Forum Posts: 1363
Member Since:
December 17, 2016
sp_UserOfflineSmall Offline

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.

April 29, 2017
12:10 pm
Doug
British Columbia, Canada
Member
Members
Forum Posts: 4190
Member Since:
December 12, 2009
sp_UserOfflineSmall Offline
162sp_Permalink sp_Print

Twotons said
Now, I'm not Kreskin, but I see another thread closer coming very soon...sf-laugh  

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

April 29, 2017
12:18 pm
Doug
British Columbia, Canada
Member
Members
Forum Posts: 4190
Member Since:
December 12, 2009
sp_UserOfflineSmall Offline
163sp_Permalink sp_Print

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

April 29, 2017
12:34 pm
Top It Up
Member
Members (temp break)
Forum Posts: 1363
Member Since:
December 17, 2016
sp_UserOfflineSmall Offline

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.

April 29, 2017
12:35 pm
JustMe2016
Member
Members
Forum Posts: 129
Member Since:
October 21, 2016
sp_UserOfflineSmall Offline
165sp_Permalink sp_Print

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?

April 29, 2017
12:50 pm
ReX
Member
Banned
Forum Posts: 74
Member Since:
April 28, 2017
sp_UserOfflineSmall Offline

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%....

April 29, 2017
3:38 pm
frank87
Member
Members
Forum Posts: 60
Member Since:
April 22, 2017
sp_UserOfflineSmall Offline
167sp_Permalink sp_Print

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.

April 29, 2017
3:40 pm
frank87
Member
Members
Forum Posts: 60
Member Since:
April 22, 2017
sp_UserOfflineSmall Offline

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.

April 29, 2017
3:51 pm
Top It Up
Member
Members (temp break)
Forum Posts: 1363
Member Since:
December 17, 2016
sp_UserOfflineSmall Offline
169sp_Permalink sp_Print

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.

April 29, 2017
3:58 pm
Peter
Admin
Forum Posts: 1390
Member Since:
May 15, 2007
sp_UserOfflineSmall Offline
170sp_Permalink sp_Print

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.

This topic is locked No permission to create posts

Please write your comments in the forum.