Home Capital Sells $1.1 Billion in Loans as Deposits Fall

Home Capital Group Inc. agreed to sell as much as C$1.5 billion ($1.1 billion) worth of mortgage renewals to an unidentified buyer as the struggling Canadian lender looks to shore up its balance sheet and restore investor confidence. The stock surged for a second day.

The non-binding deal includes up to C$1 billion of uninsured mortgages and C$500 million of insured mortgages, equal to about 10 percent of the company’s total mortgage book. The sale includes mortgages coming due for renewal, not on-balance sheet loans, Jaeme Gloyn, an analyst at National Bank of Canada, said in a research note. The lender also plans to shift its strategy away from funding mortgages from its deposit base.