TORONTO — The chief executive of HOOPP has resigned as a director of Home Capital Group and its subsidiaries, citing a potential conflict of interest following the pension fund's decision to provide $2 billion of credit to the mortgage company.
The Healthcare of Ontario Pension Plan manages more than $70 billion of retirement funds and will receive a $100 million non-refundable fee plus 10 per cent interest on money provided to Home Trust through the agreement.
HOOPP chief executive Jim Keohane had 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.
Jim Keohane, president and CEO of the Healthcare of Ontario Pension Plan (HOOPP) in Toronto, Ont., Tuesday, June 26, 2012. (Photo: Kevin Van Paassen/The Globe and Mail via The Canadian Press)
But Home Capital announced late Thursday that Keohane had advised it that he would no longer be a director for Home Trust, Home Bank or the parent company, due to potential conflicts of interest.
It also said that the chairman of Home Capital's board, Kevin Smith, would no longer be a director of HOOPP. Besides his position at Home Capital, Smith is chief executive of St. Joseph's Health System.
The resignations come as Home Capital grapples with a series of problems, including a collapse of Home Capital's stock price and a sudden withdrawal of hundreds of millions of dollars from Home Trust high-interest savings accounts.
The company announced Friday morning that it expected the amount deposited into the savings accounts would be $521 million by the end of the day, down from about $1.4 billion that was announced on Monday.
On Wednesday, Home Capital's share prices plunged 65 per cent on news that it was negotiating a $2 billion line of credit from an unidentified lender. The stock regained about half its losses on Thursday, after the deal was finalized.
A brief statement from HOOPP on Thursday confirmed media reports that it was the leading source of the line of credit.
"Like any investment, this decision was made in the best interest of our members' financial needs,'' HOOPP said.
"We have a long history of providing these types of investments as appropriate, risk-balanced vehicles to meet our overall return targets. This investment followed all the appropriate due diligence.''