Deft crisis management key to surviving recessions

The Great Recession may not have hit Canada as hard as the United States, but it certainly caused turbulence north of the border

By Neil Sharma

01 Aug. 2018

The Great Recession may not have hit Canada as hard as the United States, but it certainly caused turbulence north of the border.

Not for Nick Kyprianou, though. It was around that time that he was promoted president of Home Trust and began a consolidation campaign.

“During the liquidity crisis in 2007, that’s when at Home Trust, due to the fact that we were well-positioned and had a tremendous amount of capital, we were able to turn that into an opportunity,” said Kyprianou. “We were basically going around buying portfolios from companies that just used a securitization model and didn’t use a balance sheet. We saw the market for what it was. A lot of people just thought it was going to be a short-term meltdown, and at Home Trust we moved quickly on arrears and we moved aggressively. Other people were thinking things would get better very soon, but it didn’t happen. Our aggressiveness and discipline managing arrears, and sticking to new business we put on the books, kept us alive.”

By the time Kyprianou left Home Trust after 18 years—when he began as manager of underwriting, the company had 20 employees and did $200mln in mortgages—it did over $15bln in mortgages and had more than 550 employees.

With sagacity like that, it’s little surprise that Kyprianou eventually founded his own company, RiverRock Mortgage Investment Corporation. In 2012, the first of many B-20 guidelines hit and Kyrpianou realized there was opportunity in the MIC space.

“By then, regulators were becoming proscriptive. It’s difficult to grow a business with one arm tied behind your back, but I saw the MIC space as an opportunity to service mortgage brokers,” he said.

While Kyprianou’s career is replete with accomplishments and milestones, he cites navigating Home Trust through the Great Recession as among his greatest achievements. To understand how he weathered the storm, Kyprianou recalls the early ‘90s recession.

“I think working there in the early ‘90s during the real estate meltdown taught me how to handle crisis,” he said. “You don’t learn tons when the market does well because it corrects mistakes, but when the market goes poorly, it magnifies mistakes. What you learn in a bad market is so valuable that I wouldn’t give it up for anything.”

What Kyprianou mastered during the real estate nadir was crisis management.

“You learn to manage crisis. You learn how to manage collections and negotiate. You have a much better understanding of risk, real estate, and exit strategies. The bad market gives you all of your foundation of knowledge. A good market just makes you think you’re smart, but surviving a bad market makes you realize that you’ve learned something.”