Home Capital taps $1B from credit line as customers pull deposits

TORONTO – Home Capital says it expects to receive an initial $1 billion on Monday from the $2 billion credit line it was provided last week as more customers pulled their savings out of the struggling mortgage lender.

Shares of the Toronto-based lender tumbled last week following allegations from Ontario’s securities watchdog that it misled investors, accusations it says are without merit and has promised to defend itself against. The news spurred many savers to withdraw their deposits, which Home Capital uses to fund its lending.

The stock tumbled another 20.77 per cent, or $1.67, shortly after the Toronto Stock Exchange opened Monday and was trading at $6.37.

Home Capital (TSX:HCG) says it expects the total amount in its high-interest savings accounts will dwindle to about $391 million by the end of Monday, a decline of about $1 billion from a week ago.

It also says the balance of total guaranteed investment certificates has fallen to $12.86 billion as of Friday, down from $13.01 billion as of last Monday.

The Healthcare of Ontario Pension Plan gave a $2 billion credit line last week to Home Capital.

The Ontario Securities Commission has scheduled a hearing into the allegations against Home Capital on Thursday.