Home Capital Group says another $290M pulled out of savings accounts

Home Capital Group Inc. reported Friday that money continuesto flow out of the company, withroughly$290 million pulled out of high-interest savings accounts on Thursday alone.

The drawdown comes after another$472 million was withdrawn from the company's savings accountson the day before.

The alternative mortgage lender said it expects to have $521 million left in its savings accountsas of thestart of the business day on Friday. That's down from about $1.4 billion as recently as Monday.

Savers are pulling money out of the company because ofconcerns about how long a financial lifeline that Home Capitalsecured this week will last. The company makes money by loaning out funds in its savings accounts to people who want mortgages or other debt. By law, the company has to have a certain amount of money on hand to offset the value of its mortgage book.

On Thursday, the company said it had finalized a deal for a $2-billion line of credit, led by the Healthcare of Ontario Pension Plan (HOOPP). Those funds will be used to shore up the company's balance sheet, but come with a hefty interest rate attached.

Changes on the board

After news of the HOOPP lifeline emerged on Thursday, the CEO of the pension fund announced he would step down from his job on Home Capital's board of directors, citing the potential conflict of interest.

HOOPPchief executive JimKeohanehad been a director of Home Capital since last year and had been nominated to be re-elected at the mortgage lender's annual meeting, scheduled for May 11.

On Wednesday, Home Capital's share prices plunged 65 per cent on news that it was negotiating for the $2-billion line of credit. The stock rebounded by 35 per cent on Thursday, after the deal was finalized.

• Shares in alternative lender Home Capital plummet 65%

Home Capital shares rose two cents onFriday to close at $8.04 on the TSX.