Bloomberg News Doug Alexander December 5, 2017 5:30 PM EST Last Updated December 5, 2017 6:19 PM EST
An audit “identified documentation issues and client misrepresentations” with some mortgages from its B2B Bank unit that were sold to a third-party firm, the lender said
Laurentian Bank of Canada fell the most in almost nine years after reporting it found customer misrepresentations on some mortgage loans it sold to another firm, echoing problems that almost sunk alternative-lender Home Capital Group Inc. earlier this year.
Shares of the Montreal-based regional bank plunged 7.7 per cent to $56.11 at 4 p.m. in Toronto, reversing earlier gains that saw it reach an intraday high of $62.92 after posting fourth-quarter earnings that beat analysts’ estimates. Laurentian’s decline, the biggest one-day drop since January 2009, dragged down Canada’s other large lenders.
An audit “identified documentation issues and client misrepresentations” with some mortgages from its B2B Bank unit that were sold to a third-party firm, the lender said Tuesday in its annual report. Laurentian said it will repurchase about $89 million ($70 million) of those mortgages in the first quarter, or 4.9 per cent of such loans sold to the firm. It will buy back an additional $91 million of mortgages “inadvertently” sold to the firm, also in the first quarter.