Former RBC exec replaces founder on Home Capital board

“This is the start of our governance renewal,” board chairman Kevin Smith said in a news release, adding that more changes are coming.

“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.”

Home Capital’s share price has been under pressure in recent weeks as the company grapples with a loss of deposits following allegations from Ontario’s securities watchdog.

Customers have been pulling their money out after staff at the Ontario Securities Commission (OSC) alleged that Home Capital, Soloway, former CEO Martin Reid and current CFO Robert Morton misled investors in their handling of a scandal involving falsified loan applications.

The company has said that the allegations are without merit and has vowed to defend itself. Lawyers for all three men did not respond to a request for comment on Thursday. Reid declined to comment several weeks ago when the OSC first announced the allegations.

The OSC has scheduled a June 2 hearing to deal with that matter.

Home Capital has secured a $2 billion line of credit from the Healthcare of Ontario Pension Plan to help make up the lost capital.

Veritas analyst Mike Rizvanovic says bringing in someone as credible as Hibben is a small positive, but noted Home Capital is still dealing with an outflow of the cash it uses to fund lending.

“We can’t say that bringing new people in is going to necessarily stem the outflow of deposits,” Rizvanovic said.

“It’s not like you bring this individual in and then suddenly they’ve got their access back to the deposit market. It’s way too early to know that.”

Hibben’s resume includes experience as head of strategy at Royal Bank and managing director of mergers and acquisitions for RBC Capital Markets until his retirement from the bank in 2014.

Since retiring from RBC in 2014, Hibben has been an independent financial adviser and a director of several companies. He was appointed last year to the board of trustees for OPTrust, which manages funds for an Ontario public-sector pension plan.

Home Capital announced last week that Soloway would step down from the board of directors once a replacement is found.

Soloway was the soul of the organization, so it’s natural that they would replace him in a bid to restore investor confidence, says Patrick Blais, a senior portfolio manager at Manulife Asset Management.

The best outcome for the company would be to get acquired by an established financial institution, Blais says.

“But it just doesn’t seem we’re headed in that direction given the liquidity issues they’re struggling with and the nature of their business. There just doesn’t seem to be a likely buyer to resolve it.”