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UPDATE 1-Home Capital sees 2nd-qtr loss on costs related to liquidity issue

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June 29 (Reuters) - Canadian lender Home Capital Group Inc said on Thursday it expects to record a loss in the second quarter due to costs related to its efforts to shore up liquidity.

The lender, which is expected to release second-quarter results on Aug. 2, said its expenses would increase by C$233 million ($179 million) before taxes, which includes C$210 million in costs related to its recent liquidity issue.

Depositors had withdrawn a majority of funds from Home Capital's high interest savings amid the exit of former Chief Executive Martin Reid and the Ontario Securities Commission's accusations that the company misled investors about problems with its mortgage underwriting procedures.

Home Capital settled with the OSC earlier this month and Warren Buffett's Berkshire Hathaway Inc said last week it would provide a C$2 billion loan to Home Capital and take a 38 percent stake, instilling some confidence among depositors.

"The serious liquidity event that occurred late in April required the Company to take quick and dramatic steps, liquidating assets and arranging a rescue financing facility," interim Chief Financial Officer Robert Blowes said on Thursday.

Home Capital also said it received conditional listing approval from the Toronto Stock Exchange for Berkshire's initial investment of C$153.2 million for a stake of about 20 percent.

The lender, which will conduct its annual shareholder meeting on Thursday, said average daily Guaranteed Investment Certificate (GIC) deposit inflows increased to C$38 million in the week ended June 23 from C$5 million in the week ended May 5.

"We believe that the improvement in deposit taking indicates a significant increase in depositor confidence in the Company", said Director Alan Hibben.

($1 = 1.3009 Canadian dollars) (Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Saumyadeb Chakrabarty)