Is Home Capital's crisis the pin that pops the housing bubble?
Mortgage lender Home Capital Group Inc. has a financial problem that is really a crisis of confidence.
Right now, this is a meltdown at a scandal-plagued company that just fired its CEO amidst a regulatory investigation. But in Canada's overheated residential real estate market, there are analysts predicting Home Capital's woes could be the pin that pops a housing bubble. Story (Andrew Willis)
Home Capital's executive roster justifies investors' lack of faith
We are rightly proud of Canadian financial institutions' strength and resilience during the previous decade's financial crisis. There's a downside, though: Canadians don't have a lot of recent experience with lenders who run into trouble.
Thanks, Home Capital Group, for changing all that. The alternative mortgage lender has been doing its best to convince the markets there are no long-term impacts to the Ontario Securities Commission's decision to charge current and former members of management with misleading investors in 2015.
There is a chance Home Capital can turn this around and regain the market's support. There is also a chance the crisis of confidence will grow for a company that, a few weeks ago, was considered by many a quality player in Canadian financial services. Story (David Milstead)
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GMP chief says FirstEnergy deal paying off amid weak market
Energy-market conditions have been anything but ideal for GMP Capital Inc. since it bought FirstEnergy Capital last summer, but the acquisition is paying off for Canada's largest independent dealer regardless, its chief executive officer says.
GMP acquired FirstEnergy, a prominent boutique brokerage, for $98.6-million to bolster its position in energy banking after its own franchise in Calgary had weakened. The market had looked as if it was recovering while its integration of FirstEnergy got under way, but the rebound stalled.
Harris Fricker, GMP's CEO, said a combination of factors have conspired to muddy the energy outlook, including the stubborn global glut of crude oil, uncertainty over anti-trade measures by U.S. President Donald Trump and a shift in capital flows to U.S. regions that are less pricey to develop than Canada's oil sands. The brokerage is not banking on a quick return to the boom years, though. Story (Jeffrey Jones)
DAILY DEALS
Volkswagen is considering a possible sale of Italian motorcycle maker Ducati as Europe's largest carmaker streamlines operations to help fund a strategic overhaul following its emissions scandal, two people familiar with the matter said. Story (Reuters)
BHP Billiton has put its Fayetteville shale gas assets in the United States back on the block, the world's largest miner said on Wednesday, as it seeks to focus on more lucrative opportunities in oil. Story (Reuters)
Real Matters Inc., a real estate data firm, plans to price shares at $12 to $13 apiece in its initial public offering in early May, seeking a valuation of as much as $1.1-billion, according to people familiar with the matter. Story
ELSEWHERE IN FINANCE
Short sellers are gloating, investors are writhing in pain – and everyone else is wondering whether Home Capital Group Inc.'s troubles will reverberate beyond the home lender's withering stock. Story (David Berman)
A cut in the corporate tax rate would involve immediate pain for some big banks, namely Citigroup Inc. and Bank of America Corp., but an eventual earnings boost should more than make up for that. Story (WSJ, subscription required)
Credit Suisse's Tidjane Thiam should doff his cap to Emmanuel Macron, the 39-year-old ex-Rothschild banker on track to win the French presidency. Macron's first-round win on Sunday and expected victory in the May run-off – which has lightened the mood in European markets – should allow the Swiss bank to seal a $4-billion rights issue and avoid selling off part of its lucrative domestic unit to bolster its finances. Story (Bloomberg)