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Mortgage lender Home Capital Group Inc. is taking the first step to shake up its board of directors, adding a new leader with experience in restructuring financial firms as it seeks to stabilize its business.

Home Capital said Friday that Alan Hibben would become a board member, replacing the company's retiring founder Gerald Soloway. This change paves the way for the addition of several more new board members, aiming to boost Home Capital's credibility in the market at a time when it has had a run on deposits. The appointment will also help form a team that can nimbly make decisions about Home Capital's future, either as an independent business or in a sale process.

The effort to steady Home Capital comes amid concerns that the mortgage lender's problems could have consequences for other firms tied to the housing market. Canadian Imperial Bank of Commerce economist Benjamin Tal called on the Bank of Canada to say something publicly about Home Capital, arguing the central bank could calm a growing storm of concern among U.S. fund managers about risks in Canada's housing sector.

Read more: The rise and fall of Home Capital

He said CIBC officials have "spent hours over the past few weeks talking to bloodthirsty global investors" who are growing increasingly negative about Canada thanks to U.S. President Donald Trump's tweets on trade and the Home Capital saga.

Toronto-based Home Capital recruited Mr. Hibben for his experience in the financial services industry, having previously worked as both managing director of mergers and acquisitions and head of strategy at Royal Bank of Canada. He also served as president of North American Trust Company, which underwent a restructuring and sale in the early 1990s while he was president.

"This is the start of our governance renewal," said board chair Kevin Smith in a statement, adding that more changes were still to come. "We have made considerable progress in identifying new candidates for the board and in our search for a new chief executive officer. The new CEO will in turn be involved in the hiring of a new chief financial officer, providing a major refresh in our corporate leadership as part of the process of rebuilding the company."

"Mr. Hibben's appointment affords Home Capital a highly experienced and credible director with deep relationships across the industry and is an important first step toward restoring market confidence," said credit-rating agency DBRS in a release.

Home Capital has seen more than $1.6-billion of deposits withdrawn from high-interest savings accounts in the last few weeks, which has drained the money used to fund the mortgage business. That followed allegations brought forth by the Ontario Securities Commission (OSC) in mid-April that the company improperly disclosed financial information.

In need of liquidity, Home Capital sought a $2-billion credit line syndicated by the Healthcare of Ontario Pension Plan (HOOPP) last week, but it came with burdensome terms, including an interest rate of 10 per cent. HOOPP's chief executive officer Jim Keohane also left the mortgage lender's board in the wake of the deal.

Home Capital also pushed back plans to report quarterly results this week. The company said it would release results on May 11, allowing time to assess and account for "events that have occurred since the close of the first quarter."

Sources familiar with the company's plans say that a sale of the business is the most likely path forward.

Mr. Hibben said in a statement that he would "work to encourage other candidates to join the board in short order." He said that Home Capital had a "fundamentally sound business, and one that plays a very important role in the Canadian housing finance system."

Mr. Soloway stepped down as CEO of the company he founded in early May last year, saying he planned to retire. He handed the reins to then-president Martin Reid, retaining a seat on the board.

But earlier this year, Mr. Reid's employment with the company was terminated amid the continuing review of Home Capital and its executives by the Ontario Securities Commission. The OSC later accused both executives, as well as the company's former CFO, of making false and misleading statements to the public about some mortgage brokers that were submitting fraudulent employment-income documentation. These allegations have not been proven, and Home Capital has said the allegations are "without merit."

Mr. Smith said that Mr. Hibben's "broad range of experience will be key in helping Home to navigate the new challenges facing the company and to rebuild confidence. His skills will be particularly helpful as the board works closely with management and advisers on solutions to the company's funding needs."

Mr. Tal said U.S. fund managers misunderstand Home Capital's situation, and believe the health of Canada's mortgage market looks similar to the U.S. market prior to the financial crisis in 2008. The Bank of Canada has "golden opportunity" to address that misperception when it releases its interest rate statement on May 24, he said.

"It's clear that the Home Capital situation is not the ultimate test of Canadian housing," Mr. Tal said. "The situation is contained, and the quality of the assets is solid. Any reference to that reality from the bank will carry a lot of weight."

With files from Janet McFarland and Andrew Willis.

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