(Adds background on Canadian banking system, details)
May 9 (Reuters) - Home Capital Group Inc said on Tuesday a third party intends to buy up to C$1.5 billion ($1.10 billion) in mortgages.
The third party has indicated its non-binding intention to buy as much as C$1 billion in uninsured mortgages and to buy, or accept, commitments for up to C$500 million in insured mortgages, the company said.
“This is another step forward in the company’s efforts to restore confidence in our operations,” Board Chair Brenda Eprile said in a statement.
Depositors have withdrawn more than three-fourths from Home Capital’s high-interest savings account and the company has been charged by the regulator of misleading the investors. The company expects the balance in its high-interest savings account (HISA) to fall to about C$146 million on Tuesday from C$192 million on Monday, it said.
Home Capital has become a rare Canadian financial institution to face a run on its deposits at a time when Ontario, Canada’s biggest province, has taken a series of measures to cool its red-hot housing market.
Canadian banks have enjoyed a stellar reputation and they dodged the global financial crisis by avoiding risky mortgages that sparked the collapse of many U.S. financial institutions.
Home Capital said it would continue to offer mortgages in most of its existing product categories, but at reduced volumes. The company also said it plans to tighten lending criteria and reduce some of its broker incentive programs.
On Monday, the company said it hired three well-regarded Bay Street professionals as new board directors and named a new chairwoman as it continues its management overhaul.
$1 = C$1.37 Reporting by Arathy S Nair in Bengaluru; Editing by Savio D'Souza and Nick Zieminski