Home Capital Group Inc. slashed about 65 full-time jobs on Monday as the company wraps up a plan to reduce the mortgage lender's annual spending by $15-million.
Since February, an initiative dubbed Project Expo has focused on shrinking the struggling mortgage lender's head count, office space and other operating costs as the company attempts to rebound from a run on deposits that threatened its viability earlier this year.
That project is now "substantially" complete, the company said on Monday, and is expected to meet its $15-million savings target. The jobs were eliminated from the operational, sales and underwriting division.
Having survived a period of crisis brought on by concerns about disclosure of apparent fraud among its network of brokers, Home Capital believes it has entered a new phase of its recovery. A more stable base of deposits is allowing the lender to gradually increase the flow of new loans it underwrites. But its staff is 10 per cent smaller than it was on June 30, and the company is still crafting a new strategy to wrestle its funding costs down to more manageable levels.
Home Capital booked $9.7-million in restructuring expenses in the first half of the year, and does not expect to record "any further significant expenses," according to a news release.
However, the company has just lost a key executive. Greg Parker left last week to join rival lender Street Capital Group Inc., less than three months after assuming a newly created post as Home Capital's head of strategy.
The job of crafting a new strategy falls to Yousry Bissada, who took over as chief executive officer in early August. He is leading a revamped management team that includes a new chief financial officer, Brad Kotush, who will assume Mr. Parker's responsibilities.
"We have taken important steps to ensure we achieve a more efficient cost structure, and we are now firmly focused on crafting and executing a strategy for Home Capital that will drive our growth as one of Canada's leading alternative mortgage providers," Mr. Bissada said in a statement.
The company has enjoyed renewed confidence among investors and depositors since Berkshire Hathaway Inc., the firm led by value investor Warren Buffett, became Home Capital's largest shareholder in June. But last month, shareholders rejected a proposal that would have allowed Berkshire to deepen its ties to the Canadian firm by buying another large tranche of discounted shares.
Home Capital also faces continued uncertainty as Canada's banking regulator considers tightening the rules on mortgage underwriting, including introducing tougher stress tests for uninsured mortgages. The company has said the new rules, if made law, could have a material impact on its business.