TORONTO â€” Equitable Group (TSX:EQB) shares soared on Monday after the alternative mortgage lender said it reached a deal to borrow up to $2 billion, if needed, from a syndicate of Canadian banks.
Shares of Equitable rose 33.89 per cent to $48.86 in morning trading. Equitable's stock price had been under pressure after clients of rival Home Capital Group (TSX:HCG) began pulling their money out of that subprime lender.
Many savers became nervous after staff with Ontario's securities watchdog last month alleged that Home Capital misled investors. Home Capital has said the allegations are without merit and has vowed to defend itself.
Both Equitable Group and Home Capital offer mortgages to people who may not qualify for loans from the major banks.
In a news release issued Monday, Equitable Group says it also saw a decrease in its deposit balances last week, with clients pulling out an average of $75 million daily between Wednesday and Friday. In total, Equitable lost 2.4 per cent of its deposit base during those three days.
But Equitable Group has secured a letter of commitment for a credit facility from a syndicate of banks including TD Bank, CIBC and National Bank. The terms include a 0.75 per cent commitment fee and an interest rate equal to the banks' cost of funds plus 1.25 per cent.
Follow @alexposadzki on Twitter.
The Canadian Press