Royal Bank of Canada is joining the country's other largest banks in a syndicate that has already committed to lend $2-billion to Equitable Group Inc., the Toronto-based alternative mortgage company said on Wednesday.
Equitable first announced the standby financing when it reported first-quarter earnings on Monday in a bid to calm the market at a time when its deposit base is declining. Competitor Home Capital Group Inc. also obtained a line of credit for $2-billion to offset a wave of withdrawals from its high interest savings accounts – although its financing deal has more onerous terms attached.
On an earnings call with analysts on Monday, Equitable said that it had obtained a letter of commitment for the two-year, $2-billion credit facility from a group of Canadian banks that included Toronto-Dominion Bank, Canadian Imperial Bank of Commerce, National Bank of Canada, Bank of Nova Scotia and Bank of Montreal.
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"Bankers know the industry best and if all six of Canada's largest banks have the confidence to support Equitable Bank, it is evident that our customers, whether they be savers and depositors or borrowers should have similar confidence," Equitable's chief executive officer Andrew Moor said Wednesday in a statement.