The CEO of St. Joseph's Healthcare Hamilton has stepped down as chairman of the board of a troubled subprime mortgage lender amid questions over his ability to meet the demands of his highly paid public sector job while holding a position with a financial institution.

Kevin Smith, who is the CEO of both the St. Joe's system in Hamilton and the Niagara Health System in Southern Ontario, announced Monday that he has resigned as chair of the board of Home Capital Corp., a Toronto-based company that is facing allegations of misleading investors in their handling of falsified loan applications.

The CEO of St. Joseph's Healthcare Hamilton has stepped down as chairman of the board of a troubled subprime mortgage lender. (St. Joseph's Healthcare Hamilton) Smith, who will remain a Home Capital board member, said that the demands of his jobs had been "very manageable," until recently.

"In the past few weeks, Home has been more demanding but it was important that I be part of the solution and I worked hard to balance my responsibilities," he said in an email to The Canadian Press. "However, given the changes at Home, the chair will be required to dedicate additional time and attention. As such, I've asked the board to permit me to step out of the chair and they have generously accepted my request."

The Progressive Conservatives have questioned whether Smith is able to do his job of overseeing a major health-care system in Ontario — for which he was compensated more than $720,000 last year — while also being on Home Capital's board.

'My expectation is absolutely, he would be doing that job'

When asked about Smith's resignation Monday, Ontario Premier Kathleen Wynne said that she can only assume Smith is doing his health-care job.

"I do not know the details of how he is fulfilling those responsibilities, but my expectation is absolutely, he would be doing that job," she said. "He's being paid very well for the job, but more importantly it's an extremely important job and it's an extremely complex one, so it's my expectation he would be doing that."

Home Capital has denied all allegations and has vowed to defend itself.

Richard Leblanc, a professor of law, governance and ethics at York University, said the average financial institution board chairmanship requires about 500 hours of work a year — and up to 700 hours when the institution is in distress, which is the case with Home Capital.

"There's evidence that current CEOs make the worst directors, because they tend to be stretched, they don't have the time," he said.

Smith was also on the board of the Healthcare of Ontario Pension Plan (HOOPP) until April 27, when Home Capital announced HOOPP had agreed to provide the company a $2-billion loan. At that time, Smith advised HOOPP he was stepping down from its board due to a potential conflict of interest.

The Opposition has also questioned whether relationships between the boards of Home Capital, HOOPP, and the provincial government and its agencies are appropriate, or, in the words of Finance Critic Vic Fedeli, if they "pass the smell test."

'Conflicts of interest in Ontario and Canada are under-regulated'

Leblanc said he believes there was a conflict of interest when HOOPP loaned Home Capital $2 billion, as both Smith and president and CEO of HOOPP, Jim Keohane, sat on both boards. Both announced their resignations — Smith from HOOPP and Keohane from Home Capital — after the loan had been arranged.

"The fact that you had two directors who sat on both boards suggests you might not have had the opportunity to act in the best interest of both boards," he said.

"Conflicts of interest in Ontario and Canada are under-regulated," Leblanc said. "We need some clear, black-letter guidelines on prohibiting conflicts like this."

Smith did not respond to a request to comment on that potential conflict of interest.

On Monday, Wynne was also asked about Alan Hibben, a provincial appointee to the Ontario Public Service Employees' Union Pension Plan Board of Trust, who was appointed to the board of Home Capital on Friday.

Hibben's appointment is being reviewed by the Province's Conflict of Interest Commissioner, which, Wynne said, is appropriate. Hibben is also on the Premier's Council for Government Assets in Ontario, which has advised on the sale of shares in Hydro One. He sits on other boards as well.

Wynne wouldn't comment on Home Capital's financial situation and said her only concern would be about a broader impact.

"To the degree that the viability of one entity would undermine either the financial markets or the housing markets, then yes, of course, but I can't comment on one specific situation," she said.