The so-called Great White Short didn’t go according to plans for foreign investors who bet against Canada’s banks as this country’s red-hot housing markets defied gravity. But that didn’t stop one Toronto-based asset manager from finding an opportunity to turn bearish on the lenders.

J. Zechner Associates Founder John Zechner told BNN on Tuesday he recently had a short position on Canada’s banks amid the crisis at Home Capital Group. But he doesn’t expect the alternative lender’s struggles will be a focus in bank earnings this week.

“I don’t think [Home Capital] will be as big a factor as the market expects,” Zechner said in an interview. “I’ve actually been short the bank shares over the past month and change on that, and we covered going in.”

“Quite honestly I think the bank earnings should be pretty good for a couple of reasons. One, the year-over-year comparisons,” he added. “When you look at where you were in the first quarter last year, that’s when all of the energy write-offs were at their peak, so you’re going to have a big bounce back from that.”

But Zechner suggested turmoil surrounding Home Capital isn’t a sign of a greater issue right now.

“The Home Capital thing is more a psychological issue right now because the housing market hasn’t really broken, exposure isn’t really there – it’s more down the road, which is why I think you’ve seen more aggressive, negative opinions from U.S. and other global investors,” Zechner said.  

The latest data from Home Capital revealed a further decline in balances in its high-interest savings accounts. The balances have plunged more than 90 per cent since March 27 when the company fired former Chief Executive Martin Reid. Withdrawals then accelerated after April 19, when the Ontario Securities Commission alleged the lender made misleading statements to investors about its mortgage underwriting business, causing the stock to plummet.