Noah Zivitz

Managing Editor, BNN Bloomberg

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Home Capital Group Inc. announced on Wednesday it’s planning to resume and renew a share buyback program that was put on hold in the early days of the pandemic.

Under the plan outlined by the alternative mortgage lender, up to $50 million in shares will be repurchased if the normal course issuer bid (NCIB) that’s scheduled to expire on Jan. 21 is approved for renewal by the Toronto Stock Exchange.

“Home Capital suspended such purchases in March of this year due to the onset of the COVID-19 pandemic,” Home Capital said in a release. “With the passage of time and continued stability in its financial performance, Home Capital believes that it is appropriate to resume repurchases under its NCIB.”

While the Office of the Superintendent of Financial Institutions (OSFI) has temporarily banned federally-regulated entities from buying back shares and increasing their dividends, Home Capital spokesperson Jill MacRae explained that the company’s structure gives it the flexibility to proceed with its plan.  

“Home Trust is a regulated financial institution, but we are comfortable making purchases with cash from Home Capital Group which does not impact our CET1 level or our normal operations,” she said in an emailed statement.

Colin Palmer, an OSFI spokesperson, confirmed that the regulator’s ban on buybacks and dividend hikes doesn’t apply in this case.

“Home Capital Group Inc. is a holding company. It is not a federally regulated financial institution. As such, our expectations regarding capital distributions do not apply to this entity,” Palmer said ​in an email.

Home Capital’s planned share buyback is the second such announcement by a lender in recent days. Indeed, Equitable Group Inc., which operates the OSFI-regulated Equitable Bank, announced on Dec. 21 that its plan to repurchase up to 1.14 million common shares had been approved by the Toronto Stock Exchange.