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November 12, 2013, 8:55 a.m. ET National Bank Completes Acquisition of TD Waterhouse Institutional Services' Business -- This transaction further confirms National Bank Correspondent Network's leadership position by adding 260 market intermediaries, $35 billion of assets under administration and 130,000 end-clients to its book of business -- The acquisition marks another major step in National Bank's expansion of its wealth management platform across Canada MONTREAL, Nov. 12, 2013 /CNW Telbec/ - Following receipt of all required regulatory approvals, National Bank of Canada ("National Bank" or the "Bank") (TSX: NA) today announced the completion of its acquisition of TD's institutional services business known as TD Waterhouse Institutional Services (TDWIS). This business will be integrated into National Bank's Correspondent Network ("NBCN"), which is Canada's largest provider of custodial, trading, clearing, settlement and record keeping services to independent registered portfolio managers and introducing brokers. Building on its large existing client base, NBCN will be servicing over 400 independent market intermediaries across the country who collectively manage or administer $85 billion for almost one-half million Canadian investors once the TDWIS business is brought on board. This acquisition greatly extends NBCN's reach, further confirming its status as the clear leader in this growing and important segment of the securities industry. "This transaction is another major step in the implementation of National Bank's strategy of expanding across Canada by broadening the footprint of our wealth management platform" said Luc Paiement, Executive Vice President, Wealth Management, Co-President and Co-CEO of National Bank Financial. "It will add considerable scale to our operations and, in the process, bring a number of appreciable benefits to all National Bank wealth management clients in the form of new products and services". "In the last few months we have met with many of our new clients, and are very pleased with the trust and confidence they have shown by joining us. We are committed to delivering to them the same industry leading service and support we have been providing NBCN's clients with for the past 20 years." said Patrick Primerano, Co-CEO of NBCN. "We are proud that all 64 TDWIS employees to whom we made offers have accepted them, and we look forward to welcoming them into our NBCN team of professionals." This transaction is accretive to National Bank's bottom line, adding $0.12 of earnings per share for fiscal 2014 and $0.14 for fiscal 2015, assuming the full benefit of the acquisition is realized in fiscal 2014. As a result of the acquisition, National Bank's Basel III Common Equity Tier 1 ratio will be reduced by approximately 40 basis points as at National Bank's quarter ending January 31, 2014. Client conversion is expected to be completed in the 8 months following the closing of the transaction, and a transition services agreement will be in place in the interim. About National Bank of Canada With $187 billion in assets as at July 31, 2013, National Bank of Canada (http://www.nbc.ca), together with its subsidiaries, forms one of Canada's leading integrated financial groups, and was named among the 20 strongest banks in the world by Bloomberg Markets magazine. The Bank has close to 20,000 employees and is widely recognized as a top employer. Its securities are listed on the Toronto Stock Exchange (TSX: NA). Follow the Bank's activities via social media and learn more about its extensive community involvement at clearfacts.ca and commitment.nationalbank.ca. About National Bank Correspondent Network At the service of its clients for more than 20 years, National Bank Correspondent Network has become Canada's largest provider of custodial, trading, clearing, settlement and record keeping services to independent registered portfolio managers and introducing brokers by continually redefining the industry through innovative product development, expert client care and leading technology. NBCN's team is dedicated to giving its clients the very best service and the breadth of investment choices necessary to build a successful practice. Forward Looking Statements Certain statements included in this press release constitute forward-looking statements meant for its interpretation and shouldn't be used for other purposes. These forward--looking statements are made as of the date of this document. There is a strong possibility that express or implied projections contained in these forward-looking statements will not materialize or will not be accurate. The Bank recommends that readers not place undue reliance on these statements, as a number of factors, many of which are beyond the Bank's control, could cause actual future results, conditions, actions or events to differ significantly from the targets, expectations, estimates or intentions expressed in the forward-looking statements. These factors include, without limitation, the ability to attract and retain key employees who will support the acquired institutional services business, including certain senior management of the acquired institutional services business; the ability to complete the conversion of the client records, systems and operations supporting the acquired business within anticipated time periods and costs; the retention of substantially all of the clients of the acquired institutional services business following the closing; together with general factors such as credit risk, market risk, liquidity risk, operational risk, regulatory risk, and reputation risk, (all of which are described in greater detail in the Risk Management section that begins on page 57 of the Bank's 2012 Annual Report available at http://www.sedar.com); the general economic environment and financial market conditions in Canada, changes in the accounting policies the Bank uses to report its financial condition, including uncertainties associated with assumptions and critical accounting estimates; tax laws in Canada; and changes to capital and liquidity guidelines and to the manner in which they are to be presented and interpreted. The Bank assumes no obligation to update or revise these forward-looking statements to reflect new events or circumstances and cautions readers not to place undue reliance on them. SOURCE National Bank of Canada /CONTACT: (The telephone number provided below is for the exclusive use of journalists and other media representatives.): Claude Breton Assistant Vice-President, Public Affairs National Bank Tel.: 514-394-8644 H ne Baril Director, Investor Relations National Bank Tel: 514-394-0296 Copyright CNW Group 2013 http://online.wsj.com/article/PR-CO-20131112-907876.html

Avec quelques commentaires architecturaux pour vous tous. Source: Dallas News “This,” says Martin Robitaille, “is the Old Sulpician Seminary. It dates to 1685 and is the oldest building still standing in Old Montreal. And this,” he goes on, sweeping his hand at a building across the street from the seminary, “is Mistake No. 1.” The more formal name of the latter edifice is the National Bank of Canada Tower. It was finished in 1967 and is done in the International Style: 52 concrete pillars rising 32 stories, covered in black granite, framing black-tinted windows. “Its elegant, sober appearance was intended to harmonize with the rest of the historical quarter of Old Montreal,” according to a panel in the nearby Centre d’histoire de Montréal museum, but many, including Robitaille, think it most certainly does not. Robitaille could be considered biased: He’s a professional tour guide, and his beat today is the section of Montreal just north of the St. Lawrence River, roughly a dozen blocks long and three blocks wide, that is the city’s historic center. The quarter’s small, crooked streets are filled by handsome buildings of dressed limestone, some somberly Scottish and plain, some effusively Italian, with intricate carvings and terra cotta ornamentation. Stand at any of a dozen intersections — Sainte-Hélène and des Récollets is a good example — and you are transported, architecturally at least, back in time. Which is why Robitaille finds the incursion of something in the International Style so grating. It really ruins the mood. His tour begins at Place d’Armes, in the shadow of a statue of one of the people who founded the city in 1642, Paul de Chomedey de Maisonneuve. “They came here to convert the natives,” Robitaille says. “Not so successful. After about 20 years, it became a commercial center. The fur trade.” As European demand for fur grew, so did Montreal. Its success as the funneling point of pelts from Canada’s vast forests to the Continent made it the obvious spot to locate head offices when settlers began to pour into the west. “The Golden Age was from 1850 to 1930,” Robitaille says. “That’s when Montreal was at its best.” And that’s when most of the buildings in Old Montreal were constructed. Robitaille’s tour takes us along Rue Saint-Jacques, once the heart of Montreal’s — and Canada’s — financial district. At the corner of Rue Saint-Pierre he points out four bank buildings, two of which, the CIBC and the Royal, still perform their original function. The Royal’s banking hall, built in 1928, is “a temple of money,” our guide says: soaring stone, coffered ceiling, echoing and imperious. The other two banks have been turned into high-end boutique hotels . LHotel is the plaything of Guess Jeans co-founder Georges Marciano. Marciano has sprinkled its lobby and hallways with $50 million worth of art from his private collection, including works by Roy Lichtenstein, Joan Miró, Robert Rauschenberg , Marc Chagall, David Hockney, Jasper Johns and Andy Warhol. Across the road, the former Merchants Bank is now the St. James, “considered the most luxurious hotel in town,” says Robitaille. The top floor is where folks like Elton John, U2 and the Rolling Stones stay when they’re in town. We twist and turn through Old Montreal’s narrow streets. Hidden away at 221 Saint-Sacrement is one of the few old houses left, three stories, solid stone. Today, it houses offices. “Most of the architecture surrounding us is commercial, not residential,” Robitaille says. The banks were the most lavish in design, but the warehouses, many now renovated as condominiums, were nearly as spectacular. When Robitaille was a child, his parents never brought him to Old Montreal. Then, as now, it was a bit cut off from the present-day downtown, further north, by the auto route Ville-Marie. After the banks decamped in the 1960s, Old Montreal spent the next several decades in decay. At one point, much of it was to be torn down for yet another freeway. A slow-swelling preservation movement finally gained traction in 1978 when the grain elevators blocking the view of the St. Lawrence River were demolished and a riverside walk opened. Over the next three decades, investors began to see the value in resuscitating the neighborhood. Now, more than 5,000 people call Old Montreal home, living mainly in converted warehouses. Restaurants, cafes, small hotels and plenty of art and clothing stores keep the area bustling. A tour like Robitaille’s is a fine way to be introduced to Old Montreal. For those who want to know more, two museums, the Centre d’histoire de Montréal, in a 1903 fire hall next to Place d’Youville (the site of the two Canadas’ parliament until rioters torched it in 1849), and the Pointe-à-Callière Montreal Museum of Archaeology and History, are the places to go. In the basement of the latter are the ruins of buildings that previously stood on the site, along with part of the tunnel that Little Saint-Pierre River once ran through and the city’s first graveyard, filled largely with the bodies of those killed by Iroquois attacks in the settlement’s earliest days. For those who prefer to strike out on their own, Discover Old Montreal, a well-illustrated booklet published by the provincial government, provides a detailed self-guided walking tour and is for sale in both museums. For those who just want to soak in the ambience, the simplest thing is to start in Place Jacques Cartier and stroll first east and then west along Rue Saint-Paul, Montreal’s oldest street. (Its rough paving stones make comfortable walking shoes a necessity.) Robitaille’s final stop is at the Château Ramezay. Built in 1705 as a home for the governor of Montreal, it served several other purposes through the years, including sheltering Benjamin Franklin in 1776, before it became a museum in 1895. “It’s one of only six buildings from the French period, before 1763, still standing,” says our guide. A block away is the modern courthouse complex, finished in 1971 and designed by the same people who did the National Bank tower. “That,” says Robitaille with a final flourish, “is Mistake No. 2.” And so Old Montreal comes to an end.

(Courtesy of the Financial Post) Congrats to the National Bank of Canada. Singapore supposedly like the new Switzerland.

(Courtesy of the Financial Post) RBC (#10 in the world, #1 America's) Interesting thing is, RBC was 17th or 19th back in 2007. Banking industry stats (different countries) (Courtesy of CNBC)

(Courtesy of the Financial Post)

http://www.economist.com/world/americas/displaystory.cfm?story_id=15726687&source=hptextfeatureCanadian cities Mar 18th 2010 | CALGARY AND TORONTO From The Economist print edition And the gloom in Toronto TIME was when the decision over where to put a new Canadian capital-markets regulator would have been automatic. Toronto, Canada’s most populous city and the capital of Ontario, the most populous province, has long been the country’s business and financial centre. The biggest banks are there, as is the stock exchange. Legions of lawyers, accountants and bankers flock daily to the towers surrounding King and Bay streets. And yet the Canadian government is in two minds over the home for the new authority, and may end up splitting it between several cities—partly to placate provincial regulators jealous of their purviews. This hesitation has brought grumbles from politicians in Ontario. But it is tacit recognition that economic and political power in Canada are slowly shifting westward, and in particular to Calgary, the main business centre in Alberta, a province with a large oil and gas industry. Toronto still has the top spot. Greater Toronto has 5.6m people, or almost five times as many as Calgary. It is home to more corporate headquarters than any other Canadian city. Of the 20 biggest companies in Canada, ten are based in the Toronto area. But six are now in Calgary. All are oil and gas firms, whose towers form the city’s dramatic skyline, set against the backdrop of the Rocky mountains. And Calgary has the momentum. The new housing developments that surround the city and stretch to the foothills are evidence that Alberta is sucking in people and investment from the rest of Canada. Between 1999 and 2007, while head-office employment grew by 14.1% in Toronto, it soared by 64.6% in Calgary, according to a report by the OECD, a research body. Alberta’s economy swiftly brushed off the recession. Its leaders dismiss hostility from greens to the tar sands that are the source of much of its hydrocarbons. If Americans do not want their oil, then Alberta will build a pipeline to the west coast and sell it to China, they say. Dave Bronconnier, Calgary’s mayor, laughs off the idea that his city might soon supplant Toronto. But he admits that he has tried to woo one of Canada’s big five banks to come and set up its headquarters. He is also courting branch offices of banks from China, the Middle East and South Korea. Office rents are higher in Calgary than in many other cities, though they have fallen sharply since 2008. But low business taxes and the lack of a provincial sales tax make overall operating costs lower than in Ontario. The city wants to become a global centre for energy companies. Its rivals are Houston, Dallas and Dubai, rather than Toronto, says Mr Bronconnier. This boosterism is in sharp contrast to the downbeat mood back east. Despite the strength of the banks, Toronto and Ontario—the home of Canadian carmaking—have fared badly in the recession. In an editorial earlier this month the Toronto Star, the city’s biggest newspaper, bemoaned growing social inequality, worsening gridlock, a deteriorating transport system and rising taxes. “There’s a nagging but entirely justified sense that Toronto has lost its way,” the paper concluded. Ontarians as a whole are feeling uneasy. In a recent poll taken in the province for the Mowat Centre, a think-tank, half of respondents felt that Ontario’s influence in national affairs is waning and about the same number thought the province is not treated with the respect it deserves. A generation ago Toronto benefited from an influx of businesses from Montreal fleeing the threat of Quebec separatism. That threat has receded, but federal politicians are ever-sensitive to the French-speaking province’s demands. Alberta’s politicians are becoming increasingly bolshy as their economic muscle grows. And Ontario? Torontonians were long used “to assuming that they are the centre of the universe,” as Joe Martin, a business historian at the University of Toronto, puts it. They are awakening to a world in which their planet, though still the biggest in the Canadian firmament, is being eclipsed. Copyright © 2010 The Economist Newspaper and The Economist Group. All rights reserved.

(Courtesy of The New York Times)

(Courtesy of Bloomberg Media)

SAN FRANCISCO (MarketWatch) -- The credit crunch may only be in its early stages and a bigger contraction in lending in coming months could have "serious implications" for the U.S. economy, Standard & Poor's Rating Services said Friday. While politicians and others have complained that banks aren't lending, the data on credit outstanding credit in the U.S. only tenuously supports this idea, the rating agency said. See related story. "What's behind the apparent difference between perception and reality?" Standard & Poor's credit analyst Tanya Azarchs said. "It may be that, while growth in overall credit was positive through at least third-quarter 2008, it has risen at a slower pace than at any time since 1945 -- far below the 8%-10% rate in most years." Banks are replacing loans as they mature, but there's little net new loan growth, she noted. "That could mean that the slowdown in lending is just an opening act, and a true credit crunch may yet take the stage," Azarchs warned. Banks are making fewer and fewer commitments to lend, and new issues of bonds and securitized assets have slowed to a trickle, the analyst said. "This portends a contraction in total credit available in the coming months," she wrote. "Since this lack of lending may have serious implications for the economy, the U.S. government has been devising policies that would encourage banks to lend." Given such pressure, S&P is focusing more on whether banks are free to make loans they think are prudent and on the health of the overall economy, Azarchs said. http://www.marketwatch.com/news/story/Credit-crunch-may-only-have/story.aspx?guid={4F0DA616-A789-49A7-9EFE-A65C5A0986F9}

The banking system in eastern Europe is increasingly vulnerable to a severe economic downturn, Moody’s has warned, saying western European banks with local subsidiaries are at risk of ratings downgrades. “The relative vulnerabilties in east European banking systems will be exposed by an increasingly tougher operating environment in eastern Europe as a result of a steep and long economic downturn coupled with macroeconomic vulnerabilities,” Moody’s said in a report. The ratings agency said it expected “continuous downward pressure on east European bank ratings” because of deteriorating asset quality, falling local currencies, exposure to a regional slump in real-estate and the units’ reliance on scarce short-term funding. Eurozone banks have the largest exposure to central and eastern Europe, with liabilities of $1,500bn – about 90 per cent of total foreign bank exposure to the region. Shares of the handful of banks with substantial investments in eastern Europe – led by Austria’s Raiffeisen and Erste Bank, Société Générale of France, Italy’s UniCredit (which owns Bank Austria) and Belgian group KBC – tumbled after the ratings agency said it was concerned about the impact of a slowdown and the ability of the parent banks to support their support units in the region. The Austrian banking system is the most vulnerable, with eastern Europe accounting for nearly half of its foreign loans, while Italian banks are exposed to Poland and Croatia and Scandinavian institutions to the Baltic states. Central and eastern European currencies have come under intense pressure in recent weeks. The credit crisis has raised fears over the region’s ability to finance its current account deficits and slowing global growth has heightened concerns over the health of its export-dependent economies. The Polish zloty plunged to a five-year low against the euro on Tuesday, while the Czech koruna hit a three-year trough against the single currency and the Hungarian forint falling to a record low. The Prague and Warsaw stock indices meanwhile fell to their lowest levels in five years, while the smaller markets of Budapest, Zagreb and Bucharest skirted close to multi-year lows. The euro dropped to a two-month low against the dollar on Tuesday on heightened concerns over eurozone banks’ exposure to the worsening conditions in eastern Europe. Amid the growing sense of crisis in eastern European economies, Hungary on Tuesday outlined plans to save Ft210bn (€680m, $860m) this year to prevent an increase in the budget deficit. Hungary’s economy is expected to contract by up to 3 per cent this year, much more than earlier expectations. Antje Praefcke at Commerzbank said eastern European currencies were in a “self-feeding depreciation spiral.” “The creditworthiness of local banks, companies and private households, who hold mainly foreign currency denominated debt, is deteriorating with each depreciation in eastern European currencies, thus further undermining confidence in the currencies,” she said. Ms Praefcke said further depreciation of eastern European currencies was thus a distinct possibility, which was likely to undermine the euro. “The collapse of these currencies is likely to constitute a risk for the euro,” she said. “So far markets have largely ignored this fact, but are unlikely to be able to maintain this approach if the weakness of the eastern European currencies continues.” Western European banks have piled into the former Communist countries in recent years as economic growth in the region outpaced domestic gains. The accession of 10 new members to the European Union in 2004, and of Romania and Bulgaria in 2007, added to optimism about the region. In 2007, Raiffeisen and Erste Bank earned the vast majority of their pre-tax profits in eastern European countries including Russia and Ukraine. Since the onset of the global financial crisis, Hungary, Latvia and Ukraine have all received emergency loans from the International Monetary Fund, with other countries in the region expected to follow.

Are Bay Street's golden days coming to an end? Eoin Callan, Financial Post Published: Wednesday, February 11, 2009 Some of Canada’s banks are already exploring ways to change their reward structure for investment bankers to avoid creating incentives for dealmakers to hastily arrange risky deals and walk away after collecting their bonuses.ReutersSome of Canada’s banks are already exploring ways to change their reward structure for investment bankers to avoid creating incentives for dealmakers to hastily arrange risky deals and walk away after ... When Ed Clark receives his multi-million-dollar bonus next week, the chief executive of TD Bank will face immediate pressure to return the money. Bay Street's best-paid chieftain is being singled out by shareholders after three of his peers handed back their bonuses at a time when bank bosses around the world are being publicly shamed for dragging the globe into the worst recession in decades. The pressure from investors comes amid growing signs that a deep shift is afoot in the way executives and investment bankers on Bay Street are paid that could have a lasting impact on the industry. Shareholders, regulators and politicians are beginning to push for far-reaching changes in incentives in a bid to mitigate risk and help avoid the catastrophic failures that have plunged the global banking industry into crisis. Some of Canada's banks are already exploring ways to change their reward structure for investment bankers to avoid creating incentives for dealmakers to hastily arrange risky deals and walk away after collecting their bonuses. BMO Financial is in the midst of a thorough overhaul of the way it compensates bankers. The review has not been publicly disclosed, but bankers have been told to expect significant changes after similar moves at international banks such as UBS, which has introduced delays and clawback provisions for bonuses. But other banks are likely to be caught flatfooted as Ottawa prepares to sign up to a set of international guidelines on pay for bankers that are being drawn up in advance of an upcoming summit of the Group of 20 nations in London. Canada's top banking regulator said Wednesday that a consensus was emerging at a special three-day meeting in Paris "to set out sound practice guidelines on compensation for the consideration of both the [Financial Stability Forum] and the G20." "There is [a] general agreement that supervisors have a role to play in assessing whether institutions meet and implement sound practices for compensation," Ms. Dickson added by e-mail from Paris. Reform of compensation practices at banks to mitigate risk is likely to be one of the handful of tangible reforms to emerge from the summit of world leaders, said John Kirton, director of the G20 Research Group at the University of Toronto "There are not many areas of consensus ... compensation is an easy one," said the professor. But policymakers stress that Canada is likely to stop well short of moves by Washington to cap pay or other more interventionist approaches that have accompanied part nationalizations in the U.K. Instead, the approach in this country is likely to involve the supervisor taking into account of compensation schemes when evaluating the level of risk at Bay Street banks and determining the amount of capital they must hold in reserve. This is seen as a more subtle way of pressuring banks to reform their compensation schemes. While a link between compensation and capital requirements would be unwelcome on Bay Street, several bank compensation experts said Wednesday it could create an opening for them to tackle huge wage bills, which are a major cost for financial institutions. But the awarding of hefty bonuses amid a recession induced by the financial system has also triggered a wider social debate about executive compensation, as oft-repeated arguments about retaining "talent" wear thin. While these "moral and ethical" views are not shared by many investors who are critical of executive compensation, they see an opportunity to make common cause. Michel Nadeau, director of the Institute of Governance of Private and Public Organizations, said he was shocked by the level of compensation Canadian bank boards had awarded to executives amid a bruising year for investors. "There is something wrong in that world," said the former executive at Caisse de dépôt et placement du Québec, the Quebec pension fund. Shareholders are also not shy about enlisting the muscle of securities regulators in pushing pay up the agenda. A shareholder group representing many of the country's largest investors cited executive compensation as its "number one" priority for 2009 during a private meeting this week with Ontario Securities Commission, according to documents obtained by the Financial Post. The group also drew the attention of enforcement officials to a probe launched by New York Attorney General Andrew Cuomo, who said Wednesday he was investigating "secret" moves to pay bonuses early at Merrill Lynch. While the investors group did not make allegations of wrongdoing, a person familiar with the discussions said there were precedents for securities regulators investigating compensation matters. The Canadian Coalition for Good Governance, which represents investors with $1.4-trillion of assets under management, has also met with the chairmen of each of Canada's top banks. "Compensation is the big issue right now," said Stephen Jarislowsky, a major shareholder in Canadian banks who manages $52-billion. But his immediate focus is next week's bonus award to Mr. Clark, who was paid a $12.7-million bonus by TD last year, making him Bay Street's highest paid executive. "Ed is the worst offender," said Mr. Jarislowsky.

Twenty-five people at the heart of the meltdown ... * Julia Finch, with additional reporting by Andrew Clark and David Teather The Guardian, Monday 26 January 2009 The worst economic turmoil since the Great Depression is not a natural phenomenon but a man-made disaster in which we all played a part. In the second part of a week-long series looking behind the slump, Guardian City editor Julia Finch picks out the individuals who have led us into the current crisis Greenspan Testifies At Senate Hearing On Oil Dependence Former Federal Reserve chairman Alan Greenspan, who backed sub-prime lending. Alan Greenspan, chairman of US Federal Reserve 1987- 2006 Only a couple of years ago the long-serving chairman of the Fed, a committed free marketeer who had steered the US economy through crises ranging from the 1987 stockmarket collapse through to the aftermath of the 9/11 attacks, was lauded with star status, named the "oracle" and "the maestro". Now he is viewed as one of those most culpable for the crisis. He is blamed for allowing the housing bubble to develop as a result of his low interest rates and lack of regulation in mortgage lending. He backed sub-prime lending and urged homebuyers to swap fixed-rate mortgages for variable rate deals, which left borrowers unable to pay when interest rates rose. For many years, Greenspan also defended the booming derivatives business, which barely existed when he took over the Fed, but which mushroomed from $100tn in 2002 to more than $500tn five years later. Billionaires George Soros and Warren Buffett might have been extremely worried about these complex products - Soros avoided them because he didn't "really understand how they work" and Buffett famously described them as "financial weapons of mass destruction" - but Greenspan did all he could to protect the market from what he believed was unnecessary regulation. In 2003 he told the Senate banking committee: "Derivatives have been an extraordinarily useful vehicle to transfer risk from those who shouldn't be taking it to those who are willing to and are capable of doing so". In recent months, however, he has admitted at least some of his long-held beliefs have turned out to be incorrect - not least that free markets would handle the risks involved, that too much regulation would damage Wall Street and that, ultimately, banks would always put the protection of their shareholders first. He has described the current financial crisis as "the type ... that comes along only once in a century" and last autumn said the fact that the banks had played fast and loose with shareholders' equity had left him "in a state of shocked disbelief". Mervyn King, governor of the Bank of England Mervyn King When Mervyn King settled his feet under the desk in his Threadneedle Street office, the UK economy was motoring along just nicely: GDP was growing at 3% and inflation was just 1.3%. Chairing his first meeting of the Bank's monetary policy committee (MPC), interest rates were cut to a post-war low of 3.5%. His ambition was that monetary policy decision-making should become "boring". How we would all like it to become boring now. When the crunch first took hold, the Aston Villa-supporting governor insisted it was not about to become an international crisis. In the first weeks of the crunch he refused to pump cash into the financial system and insisted that "moral hazard" meant that some banks should not be bailed out. The Treasury select committee has said King should have been "more pro-active". King's MPC should have realised there was a housing bubble developing and taken action to damp it down and, more recently, the committee should have seen the recession coming and cut interest rates far faster than it did. Politicians Bill Clinton, former US president Clinton shares at least some of the blame for the current financial chaos. He beefed up the 1977 Community Reinvestment Act to force mortgage lenders to relax their rules to allow more socially disadvantaged borrowers to qualify for home loans. In 1999 Clinton repealed the Glass-Steagall Act, which ensured a complete separation between commercial banks, which accept deposits, and investment banks, which invest and take risks. The move prompted the era of the superbank and primed the sub-prime pump. The year before the repeal sub-prime loans were just 5% of all mortgage lending. By the time the credit crunch blew up it was approaching 30%. Gordon Brown, prime minister The British prime minister seems to have been completely dazzled by the movers and shakers in the Square Mile, putting the City's interests ahead of other parts of the economy, such as manufacturers. He backed "light touch" regulation and a low-tax regime for the thousands of non-domiciled foreign bankers working in London and for the private equity business. George W Bush, former US president Clinton might have started the sub-prime ball rolling, but the Bush administration certainly did little to put the brakes on the vast amount of mortgage cash being lent to "Ninja" (No income, no job applicants) borrowers who could not afford them. Neither did he rein back Wall Street with regulation (although the government did pass the Sarbanes-Oxley Act in the wake of the Enron scandal). Senator Phil Gramm Former US senator from Texas, free market advocate with a PhD in economics who fought long and hard for financial deregulation. His work, encouraged by Clinton's administration, allowed the explosive growth of derivatives, including credit swaps. In 2001, he told a Senate debate: "Some people look at sub-prime lending and see evil. I look at sub-prime lending and I see the American dream in action." According to the New York Times, federal records show that from 1989 to 2002 he was the top recipient of campaign contributions from commercial banks and in the top five for donations from Wall Street. At an April 2000 Senate hearing after a visit to New York, he said: "When I am on Wall Street and I realise that that's the very nerve centre of American capitalism and I realise what capitalism has done for the working people of America, to me that's a holy place." He eventually left Capitol Hill to work for UBS as an investment banker. Wall Street/Bankers Abby Cohen, Goldman Sachs chief US strategist The "perpetual bull". Once rated one of the most powerful women in the US. But so wrong, so often. She failed to see previous share price crashes and was famous for her upwards forecasts. Replaced last March. Kathleen Corbet, former CEO, Standard & Poor's The credit-rating agencies were widely attacked for failing to warn of the risks posed by mortgage-backed securities. Kathleen Corbet ran the largest of the big three agencies, Standard & Poor's, and quit in August 2007, amid a hail of criticism. The agencies have been accused of acting as cheerleaders, assigning the top AAA rating to collateralised debt obligations, the often incomprehensible mortgage-backed securities that turned toxic. The industry argues it did its best with the information available. Corbet said her decision to leave the agency had been "long planned" and denied that she had been put under any pressure to quit. She kept a relatively low profile and had been hired to run S&P in 2004 from the investment firm Alliance Capital Management. Investigations by the Securities and Exchange Commission and the New York attorney general among others have focused on whether the agencies are compromised by earning fees from the banks that issue the debt they rate. The reputation of the industry was savaged by a blistering report by the SEC that contained dozens of internal emails that suggested they had betrayed investors' trust. "Let's hope we are all wealthy and retired by the time this house of cards falters," one unnamed S&P analyst wrote. In another, an S&P employee wrote: "It could be structured by cows and we would rate it." "Hank" Greenberg, AIG insurance group Now aged 83, Hank - AKA Maurice - was the boss of AIG. He built the business into the world's biggest insurer. AIG had a vast business in credit default swaps and therefore a huge exposure to a residential mortgage crisis. When AIG's own credit-rating was cut, it faced a liquidity crisis and needed an $85bn (£47bn then) bail out from the US government to avoid collapse and avert the crisis its collapse would have caused. It later needed many more billions from the US treasury and the Fed, but that did not stop senior AIG executives taking themselves off for a few lavish trips, including a $444,000 golf and spa retreat in California and an $86,000 hunting expedition to England. "Have you heard of anything more outrageous?" said Elijah Cummings, a Democratic congressman from Maryland. "They were getting their manicures, their facials, pedicures, massages while the American people were footing the bill." Andy Hornby, former HBOS boss So highly respected, so admired and so clever - top of his 800-strong class at Harvard - but it was his strategy, adopted from the Bank of Scotland when it merged with Halifax, that got HBOS in the trouble it is now. Who would have thought that the mighty Halifax could be brought to its knees and teeter on the verge of nationalisation? Sir Fred Goodwin, former RBS boss Once one of Gordon Brown's favourite businessmen, now the prime minister says he is "angry" with the man dubbed "Fred the Shred" for his strategy at Royal Bank of Scotland, which has left the bank staring at a £28bn loss and 70% owned by the government. The losses will reflect vast lending to businesses that cannot repay and write-downs on acquisitions masterminded by Goodwin stretching back years. Steve Crawshaw, former B&B boss Once upon a time Bradford & Bingley was a rather boring building society, which used two men in bowler hats to signify their sensible and trustworthy approach. In 2004 the affable Crawshaw took over. He closed down B&B businesses, cut staff numbers by half and turned the B&B into a specialist in buy-to-let loans and self-certified mortgages - also called "liar loans" because applicants did not have to prove a regular income. The business broke down when the wholesale money market collapsed and B&B's borrowers fell quickly into debt. Crawshaw denied a rights issue was on its way weeks before he asked shareholders for £300m. Eventually, B&B had to be nationalised. Crawshaw, however, had left the bridge a few weeks earlier as a result of heart problems. He has a £1.8m pension pot. Adam Applegarth, former Northern Rock boss Applegarth had such big ambitions. But the business model just collapsed when the credit crunch hit. Luckily for Applegarth, he walked away with a wheelbarrow of cash to ease the pain of his failure, and spent the summer playing cricket. Dick Fuld, Lehman Brothers chief executive The credit crunch had been rumbling on for more than a year but Lehman Brothers' collapse in September was to have a catastrophic impact on confidence. Richard Fuld, chief executive, later told Congress he was bewildered the US government had not saved the bank when it had helped secure Bear Stearns and the insurer AIG. He also blamed short-sellers. Bitter workers at Lehman pointed the finger at Fuld. A former bond trader known as "the Gorilla", Fuld had been with Lehman for decades and steered it through tough times. But just before the bank went bust he had failed to secure a deal to sell a large stake to the Korea Development Bank and most likely prevent its collapse. Fuld encouraged risk-taking and Lehman was still investing heavily in property at the top of the market. Facing a grilling on Capitol Hill, he was asked whether it was fair that he earned $500m over eight years. He demurred; the figure, he said, was closer to $300m. Ralph Cioffi and Matthew Tannin Cioffi (pictured) and Tannin were Bear Stearns bankers recently indicted for fraud over the collapse of two hedge funds last year, which was one of the triggers of the credit crunch. They are accused of lying to investors about the amount of money they were putting into sub-prime, and of quietly withdrawing their own funds when times got tough. Lewis Ranieri The "godfather" of mortgage finance, who pioneered mortgage-backed bonds in the 1980s and immortalised in Liar's Poker. Famous for saying that "mortgages are math", Ranieri created collateralised pools of mortgages. In 2004 Business Week ranked him alongside names such as Bill Gates and Steve Jobs as one of the greatest innovators of the past 75 years. Ranieri did warn in 2006 of the risks from the breakneck growth of mortgage securitisation. Nevertheless, his Texas-based Franklin Bank Corp went bust in November due to the credit crunch. Joseph Cassano, AIG Financial Products Cassano ran the AIG team that sold credit default swaps in London, and in effect bankrupted the world's biggest insurance company, forcing the US government to stump up billions in aid. Cassano, who lives in a townhouse near Harrods in Knightsbridge, earned 30 cents for every dollar of profit his financial products generated - or about £280m. He was fired after the division lost $11bn, but stayed on as a $1m-a-month consultant. "It seems he single-handedly brought AIG to its knees," said John Sarbanes, a Democratic congressman. Chuck Prince, former Citi boss A lawyer by training, Prince had built Citi into the biggest bank in the world, with a sprawling structure that covered investment banking, high-street banking and wealthy management for the richest clients. When profits went into reverse in 2007, he insisted it was just a hiccup, but he was forced out after multibillion-dollar losses on sub-prime business started to surface. He received about $140m to ease his pain. Angelo Mozilo, Countrywide Financial Known as "the orange one" for his luminous tan, Mozilo was the chairman and chief executive of the biggest American sub-prime mortgage lender, which was saved from bankruptcy by Bank of America. BoA recently paid billions to settle investigations by various attorney generals for Countrywide's mis-selling of risky loans to thousands who could not afford them. The company ran a "VIP programme" that provided loans on favourable terms to influential figures including Christopher Dodd, chairman of the Senate banking committee, the heads of the federal-backed mortgage lenders Fannie Mae and Freddie Mac, and former assistant secretary of state Richard Holbrooke. Stan O'Neal, former boss of Merrill Lynch O'Neal became one of the highest-profile casualties of the credit crunch when he lost the confidence of the bank's board in late 2007. When he was appointed to the top job four years earlier, O'Neal, the first African-American to run a Wall Street firm, had pledged to shed the bank's conservative image. Shortly before he quit, the bank admitted to nearly $8bn of exposure to bad debts, as bets in the property and credit markets turned sour. Merrill was forced into the arms of Bank of America less than a year later. Jimmy Cayne, former Bear Stearns boss The chairman of the Wall Street firm Bear Stearns famously continued to play in a bridge tournament in Detroit even as the firm fell into crisis. Confidence in the bank evaporated after the collapse of two of its hedge funds and massive write-downs from losses related to the home loans industry. It was bought for a knock down price by JP Morgan Chase in March. Cayne sold his stake in the firm after the JP Morgan bid emerged, making $60m. Such was the anger directed towards Cayne that the US media reported that he had been forced to hire a bodyguard. A one-time scrap-iron salesman, Cayne joined Bear Stearns in 1969 and became one of the firm's top brokers, taking over as chief executive in 1993. Others Christopher Dodd, chairman, Senate banking committee (Democrat) Consistently resisted efforts to tighten regulation on the mortgage finance firms Fannie Mae and Freddie Mac. He pushed to broaden their role to dodgier mortgages in an effort to help home ownership for the poor. Received $165,000 in donations from Fannie and Freddie from 1989 to 2008, more than anyone else in Congress. Geir Haarde, Icelandic prime minister He announced on Friday that he would step down and call an early election in May, after violent anti-government protests fuelled by his handling of the financial crisis. Last October Iceland's three biggest commercial banks collapsed under billions of dollars of debts. The country was forced to borrow $2.1bn from the International Monetary Fund and take loans from several European countries. Announcing his resignation, Haarde said he had throat cancer. The American public There's no escaping the fact: politicians might have teed up the financial system and failed to police it properly and Wall Street's greedy bankers might have got carried away with the riches they could generate, but if millions of Americans had just realised they were borrowing more than they could repay then we would not be in this mess. The British public got just as carried away. We are the credit junkies of Europe and many of our problems could easily have been avoided if we had been more sensible and just said no. John Tiner, FSA chief executive, 2003-07 No one can fault 51-year-old Tiner's timing: the financial services expert took over as the City's chief regulator in 2003, just as the bear market which followed the dotcom crash came to an end, and stepped down from the Financial Services Authority in July 2007 - just a few weeks before the credit crunch took hold. He presided over the FSA when the so-called "light touch" regulation was put in place. It was Tiner who agreed that banks could make up their own minds about how much capital they needed to hoard to cover their risks. And it was on his watch that Northern Rock got so carried away with the wholesale money markets and 130% mortgages. When the FSA finally got around to investigating its own part in the Rock's downfall, it was a catalogue of errors and omissions. In short, the FSA had been asleep at the wheel while Northern Rock racked up ever bigger risks. An accountant by training, with a penchant for Porsches and proud owner of the personalised number plate T1NER, the former FSA boss has since been recruited by the financial entrepreneur Clive Cowdery to run a newly floated business that aims to buy up financial businesses laid low by the credit crunch. Tiner will be chief executive but, unusually, will not be on the board, so his pay and bonuses will not be made public. ... and six more who saw it coming Andrew Lahde A hedge fund boss who quit the industry in October thanking "stupid" traders and "idiots" for making him rich. He made millions by betting against sub-prime. John Paulson, hedge fund boss He has been described as the "world's biggest winner" from the credit crunch, earning $3.7bn (£1.9bn) in 2007 by "shorting" the US mortgage market - betting that the housing bubble was about to burst. In an apparent response to criticism that he was profiting from misery, Paulson gave $15m to a charity aiding people fighting foreclosure. Professor Nouriel Roubini Described by the New York Times as Dr Doom, the economist from New York University was warning that financial crisis was on the way in 2006, when he told economists at the IMF that the US would face a once-in-a-lifetime housing bust, oil shock and a deep recession. He remains a pessimist. He predicted last week that losses in the US financial system could hit $3.6tn before the credit crunch ends - which, he said, means the entire US banking system is in effect bankrupt. After last year's bail-outs and nationalisations, he famously described George Bush, Henry Paulson and Ben Bernanke as "a troika of Bolsheviks who turned the USA into the United Socialist State Republic of America". Warren Buffett, billionaire investor Dubbed the Sage of Omaha, Buffett had long warned about the dangers of dodgy derivatives that no one understood and said often that Wall Street's finest were grossly overpaid. In his annual letter to shareholders in 2003, he compared complex derivative contracts to hell: "Easy to enter and almost impossible to exit." On an optimistic note, Buffett wrote in October that he had begun buying shares on the US stockmarket again, suggesting the worst of the credit crunch might be over. Now is a great time to "buy a slice of America's future at a marked-down price", he said. George Soros, speculator The billionaire financier, philanthropist and backer of the Democrats told an audience in Singapore in January 2006 that stockmarkets were at their peak, and that the US and global economies should brace themselves for a recession and a possible "hard landing". He also warned of "a gigantic real estate bubble" inflated by reckless lenders, encouraging homeowners to remortgage and offering interest-only deals. Earlier this year Soros described a 25-year "super bubble" that is bursting, blaming unfathomable financial instruments, deregulation and globalisation. He has since characterised the financial crisis as the worst since the Great Depression. Stephen Eismann, hedge fund manager An analyst and fund manager who tracked the sub-prime market from the early 1990s. "You have to understand," he says, "I did sub-prime first. I lived with the worst first. These guys lied to infinity. What I learned from that experience was that Wall Street didn't give a shit what it sold." Meredith Whitney, Oppenheimer Securities On 31 October 2007 the analyst forecast that Citigroup had to slash its dividend or face bankruptcy. A day later $370bn had been wiped off financial stocks on Wall Street. Within days the boss of Citigroup was out and the dividend had been slashed.

Downturn Ends Building Boom in New York Charles Blaichman, at an unfinished tower at West 14th Street, is struggling to finance three proposed hotels by the High Line. NYtimes By CHRISTINE HAUGHNEY Published: January 07, 2009 Nearly $5 billion in development projects in New York City have been delayed or canceled because of the economic crisis, an extraordinary body blow to an industry that last year provided 130,000 unionized jobs, according to numbers tracked by a local trade group. The setbacks for development — perhaps the single greatest economic force in the city over the last two decades — are likely to mean, in the words of one researcher, that the landscape of New York will be virtually unchanged for two years. “There’s no way to finance a project,” said the researcher, Stephen R. Blank of the Urban Land Institute, a nonprofit group. Charles Blaichman is not about to argue with that assessment. Looking south from the eighth floor of a half-finished office tower on 14th Street on a recent day, Mr. Blaichman pointed to buildings he had developed in the meatpacking district. But when he turned north to the blocks along the High Line, once among the most sought-after areas for development, he surveyed a landscape of frustration: the planned sites of three luxury hotels, all stalled by recession. Several indicators show that developers nationwide have also been affected by the tighter lending markets. The growth rate for construction and land development loans shrunk drastically this year — to 0.08 percent through September, compared with 11.3 percent for all of 2007 and 25.7 percent in 2006, according to data tracked by the Federal Deposit Insurance Corporation. And developers who have loans are missing payments. The percentage of loans in default nationwide jumped to 7.3 percent through September 2008, compared with 1 percent in 2007, according to data tracked by Reis Inc., a New York-based real estate research company. New York’s development world is rife with such stories as developers who have been busy for years are killing projects or scrambling to avoid default because of the credit crunch. Mr. Blaichman, who has built two dozen projects in the past 20 years, is struggling to borrow money: $370 million for the three hotels, which include a venture with Jay-Z, the hip-hop mogul. A year ago, it would have seemed a reasonable amount for Mr. Blaichman. Not now. “Even the banks who want to give us money can’t,” he said. The long-term impact is potentially immense, experts said. Construction generated more than $30 billion in economic activity in New York last year, said Louis J. Coletti, the chief executive of the Building Trades Employers’ Association. The $5 billion in canceled or delayed projects tracked by Mr. Coletti’s association include all types of construction: luxury high-rise buildings, office renovations for major banks and new hospital wings. Mr. Coletti’s association, which represents 27 contractor groups, is talking to the trade unions about accepting wage cuts or freezes. So far there is no deal. Not surprisingly, unemployment in the construction industry is soaring: in October, it was up by more than 50 percent from the same period last year, labor statistics show. Experience does not seem to matter. Over the past 15 years, Josh Guberman, 48, developed 28 condo buildings in Brooklyn and Manhattan, many of them purchased by well-paid bankers. He is cutting back to one project in 2009. Donald Capoccia, 53, who has built roughly 4,500 condos and moderate-income housing units in all five boroughs, took the day after Thanksgiving off, for the first time in 20 years, because business was so slow. He is shifting his attention to projects like housing for the elderly on Staten Island, which the government seems willing to finance. Some of their better known and even wealthier counterparts are facing the same problems. In August, Deutsche Bank started foreclosure proceedings against William S. Macklowe over his planned project at the former Drake Hotel on Park Avenue. Kent M. Swig, Mr. Macklowe’s brother-in-law, recently shut down the sales office for a condo tower planned for 25 Broad Street after his lender, Lehman Brothers, declared bankruptcy in September. Several commercial and residential brokers said they were spending nearly half their days advising developers who are trying to find new uses for sites they fear will not be profitable. “That rug has been pulled out from under their feet,” said David Johnson, a real estate broker with Eastern Consolidated who was involved with selling the site for the proposed hotel to Mr. Blaichman, Jay-Z and their business partners for $66 million, which included the property and adjoining air rights. Mr. Johnson said that because many banks are not lending, the only option for many developers is to take on debt from less traditional lenders like foreign investors or private equity firms that charge interest rates as high as 20 percent. That doesn’t mean that all construction in New York will grind to a halt immediately. Mr. Guberman is moving forward with one condo tower at 87th Street and Broadway that awaits approval for a loan; he expects it will attract buyers even in a slowing economy. Mr. Capoccia is trying to finish selling units at a Downtown Brooklyn condominium project, and is slowly moving ahead on applying for permits for an East Village project. Mr. Blaichman, 54, is keeping busy with four buildings financed before the slowdown. He has found fashion and advertising firms to rent space in his tower at 450 West 14th Street and buyers for two downtown condo buildings. He recently rented a Lower East Side building to the School of Visual Arts as a dorm. Mr. Blaichman had success in Greenwich Village and the meatpacking district, where he developed the private club SoHo House, the restaurant Spice Market and the Theory store. He had similar hopes for the area along the High Line, where he bought properties last year when they were fetching record prices. An art collector, he considered the area destined for growth because of its many galleries and its proximity to the park being built on elevated railroad tracks that have given the area its name. The park, which extends 1.45 miles from Gansevoort Street to 34th Street, is expected to be completed in the spring. Other developers have shown that buyers will pay high prices to be in the area. Condo projects designed by well-known architects like Jean Nouvel and Annabelle Selldorf have been eagerly anticipated. In recent months, buyers have paid $2 million for a two-bedroom unit and $3 million for a three-bedroom at Ms. Selldorf’s project, according to Streeteasy.com, a real estate Web site. “It’s one of the greatest stretches of undeveloped areas,” Mr. Blaichman said. “I still think it’s going to take off.” In August 2007, Mr. Blaichman bought the site and air rights of a former Time Warner Cable warehouse. He thought the neighborhood needed its first full-service five-star hotel, in contrast to the many boutique hotels sprouting up downtown. So with his partners, Jay-Z and Abram and Scott Shnay, he envisioned a hotel with a pool, gym, spa and multiple restaurants under a brand called J Hotels. But since his mortgage brokers started shopping in late summer for roughly $200 million in financing, they have only one serious prospect for a lender. For now, he is seeking an extension on the mortgage — monthly payments are to begin in the coming months — and trying to rent the warehouse. (He currently has no income from the property.) It is perhaps small comfort that his fellow developers are having as many problems getting loans. Shaya Boymelgreen had banks “pull back” recently on financing for a 107-unit rental tower the developer is building at 500 West 23rd Street, according to Sara Mirski, managing director of development for Boymelgreen Developers. The half-finished project looked abandoned on two recent visits, but Ms. Mirski said that construction will continue. Banks have “invited” the developer to reapply for a loan next year and have offered interim bridge loans for up to $30 million. Mr. Blaichman cuts a more mellow figure than many other developers do. He avoids the real estate social scene, tries to turn his cellphone off after 6 p.m. and plays folk guitar in his spare time. For now, Mr. Blaichman seems stoic about his plight. At a diner, he polished off a Swiss-cheese omelet and calmly noted that he had no near-term way to pay off his debts. He exercises several times a week and tells his three children to curb their shopping even as he regularly presses his mortgage bankers for answers. “I sleep pretty well,” Mr. Blaichman said. “There’s nothing you can do in the middle of the night that will help your projects.” But even when the lending market improves — in months, or years — restarting large-scale projects will not be a quick process. A freeze in development, in fact, could continue well after the recession ends. Mr. Blank of the Urban Land Institute said he has taken to giving the following advice to real estate executives: “We told them to take up golf.” Correction: An article on Saturday about the end of the building boom in New York City referred incorrectly to the family relationship between the developers William S. Macklowe, whose planned project at the former Drake Hotel is in foreclosure, and Kent M. Swig, who shut down the sales office for a condominium tower on Broad Street after his lender, Lehman Brothers, declared bankruptcy. Mr. Swig is Mr. Macklowe’s brother-in-law, not his son-in-law.

Ottawa boosts mortgage buyout by $50B Eoin Callan, Canwest News Service Published: Wednesday, November 12 TORONTO - After a sustained lobbying campaign by Bay Street executives that culminated in a breakfast meeting with senior government officials in Toronto Wednesday, Ottawa agreed to the most pressing demands of Canadian banks squeezed by the credit crisis. "We had asked for four things and we got all four," Don Drummond, a senior vice-president at TD Bank Financial Group, said after Ottawa unveiled co-ordinated measures to buy up to $75-billion worth of mortgages, facilitate access to capital markets, provide extra liquidity and loosen reserve requirements. Jim Flaherty, the Finance Minister, said the moves meant Canada was making good on a pledge he made during talks with his international counterparts to collectively bolster the banking system ahead of a summit on the financial crisis this weekend in Washington. The actions were a sign of the "commitment" of Ottawa to ensure the country's financial system remained strong, said Gerry McCaughey, chief executive of Canadian Imperial Bank of Commerce, which, along with TD, is thought to be among the main beneficiaries of new looser rules on minimum capital requirements. But executives who participated in the process cautioned state interventions to ease the credit crisis had proven to be more art than science, as the United States Wednesday ditched an earlier plan to buy up toxic assets at the same time Ottawa was expanding its own scheme to buy mortgage-backed securities by $50 billion. Executives said it remains to be seen if the interventions finalized at Wednesday morning's meeting would succeed in lowering the premium banks pay for medium-term financing, which is about five times higher than before the credit crisis. In a bid to ease funding pressures, executives persuaded the Conservatives to reduce to 1.1 per cent from 1.6 per cent the fee to be charged if banks invoke a special new government guarantee when they borrow money in international capital markets. Banks argued the previous higher rate had actually encouraged lenders to nudge up the premium they were charging banks at a time when other countries were offering more generous terms. The Finance Minister said he would resist new global initiatives that might put Canadian institutions at a competitive disadvantage during the weekend summit in Washington. But he said Ottawa's ability to influence the outcome was being undermined by the absence of a federal securities regulator in Canada, which is alone among major industrialized nations in not having national oversight of financial markets. "It is difficult for us to go abroad and say governments should get their house in order when there is a glaring omission at home," he said. Flaherty said a key objective of the moves announced Wednesday was addressing "concerns about the availability of credit" for business borrowers, adding that "the government stands ready to take whatever further actions are necessary to keep Canada's financial system strong among external risks." The Bank of Canada also said it would boost the availability of affordable credit in the banking system by $8 billion, using new rules that mean institutions can bid for cash using almost any form of collateral. Banks also welcomed a move late Tuesday by the Office of the Superintendent of Financial Institutions to allow them to top up their capital reserves with securities that are a hybrid of debt and equity. The regulator clarified Wednesday that a related measure on treatment of money lent by banks to other financial institutions under the government guarantee of interbank lending "would have the effect" of "increasing their regulatory capital ratios, all else being equal", but would "not count as regulatory capital." Bank analysts said the interventions were positive for Canadian banks, but warned they would be squeezed further in the coming months as the global economic slowdown hit home and losses on bad loans mount. Ian de Verteuil, an analyst at BMO Capital Markets, cited as an example how falling demand for coal could by next year jeopardize more than $10 billion in bank loans made to finance the acquisition by Teck Cominco of Fording Canadian Coal Trust. Royal Bank of Canada, Bank of Montreal and CIBC each have about $1 billion in exposures, while TD and Scotiabank each have $400 million of exposures to the deal, which the companies expect will be viable. But bank executives remained bullish Wednesday, with TD chief executive Ed Clark saying he was still on the hunt for U.S. acquisitions.

Europe Works to Contain Crisis Article Tools Sponsored By NYC Times By CARTER DOUGHERTY, NELSON SCHWARTZ and FLOYD NORRIS Published: October 6, 2008 European nations scrambled further Monday to prevent a growing credit crisis from bringing down major banks and alarming savers as Sweden followed Germany, Austria and Denmark in offering new protections for bank deposits. As troubles in financial markets spread around the world, some governments are eager to act to avoid the mistakes of the 1930s when authorities sat on their hands during the Wall Street crash and its aftermath, Julian Chillingworth, chief investment officer at Rathbone Unit Trust Management in London, said. Sweden became the latest European country to offer protection for bank deposits, after the German government offered blanket guarantees Sunday to all private savings accounts. Austria and Denmark also did the same. Britain’s government on Monday scrambled to find ways to help the country’s ailing banking sector and even considered a partial nationalization of the industry. The chancellor of the Exchequer, Alistair Darling, continued to consult with advisers on Monday on ways to stabilize the banking sector, which may include a recapitalization financed by taxpayers, said a person at the Treasury who declined to be identified because the discussions were private. Stocks fell sharply on Monday in London, Paris and Frankfurt. New bailouts were arranged late Sunday for two European companies, Hypo Real Estate, a large German mortgage lender, and Fortis, a large banking and insurance company based in Belgium but active across much of the Continent. Under the agreement, BNP Paribas will acquire the Belgium and Luxembourg banking operations of Fortis for about $20 billion. The spreading worries came days after the United States Congress approved a $700 billion bailout package that officials had hoped would calm financial markets globally. The crisis in Europe appears to be the most serious one to face the Continent since a common currency, the euro, was created in 1999. Jean Pisani-Ferry, director of the Bruegel research group in Brussels, said Europe confronted “our first real financial crisis, and it’s not just any crisis. It’s a big one.” Britain is coming under increasing pressure to act. Some investors criticized the government for failing to set up an American-style rescue fund and for its piecemeal approach to deal with each problem. “The government needs to get on their front foot and get control of their own destiny,” Mr. Chillingworth said. “We could well be in a period where we see a quasi-nationalization in the banking sector, where taxpayers are taking equity stakes.” Britain partly nationalized Bradford & Bingley last week after the mortgage lender struggled to get financing and brokered a takeover of HBOS by Lloyds TSB after its shares lost most of its value. From Tuesday, the government will also increase the amount of retail deposits it guarantees to £50,000, or $88,600, from £35,000. Some analysts said guaranteeing deposits might reinstate client confidence but would fall short of bringing back the trust among banks that is desperately needed to encourage them to lend to each other. British banks remain burdened by their exposure to worthless mortgage assets, but the larger problem remains their unwillingness to lend to one another — even after an injection of £40 billion by the Bank of England. “Liquidity is drying up,” said Richard Portes, a professor of economics at the London Business School. “The authorities have to deal with this paralysis in the money markets.” The European Central Bank has aggressively lent money to banks as the crisis has grown. It had resisted lowering interest rates, but signaled on Thursday that it might cut rates soon. The extra money, aimed at ensuring that banks have adequate access to cash, has not reassured savers or investors, and European stock markets have performed even worse than the American markets. In Iceland, government officials and banking chiefs were discussing a possible rescue plan for the country’s commercial banks. In Berlin, Chancellor Angela Merkel and her finance minister, Peer Steinbrück, appeared on television Sunday to promise that all bank deposits would be protected, although it was not clear whether legislation would be needed to make that promise good. Mindful of the rising public anger at the use of public money to buttress the business of high-earning bankers, Ms. Merkel promised a day of reckoning for them as well. “We are also saying that those who engaged in irresponsible behavior will be held responsible,” she said. The events in Berlin and Brussels underscored the failure of Europe’s case-by-case approach to restoring confidence in the Continent’s increasingly jittery banking sector. A meeting of European heads of state in Paris on Saturday did little to calm worries, though officials there pledged to work together to ensure market stability. President Nicolas Sarkozy of France and his counterparts from Germany, Britain and Italy vowed to prevent a Lehman Brothers-like bankruptcy in Europe but they did not offer a sweeping American-style bailout package. The growing crisis has underlined the difficulty of taking concerted action in Europe because its economies are far more integrated than its governing structures. “We are not a political federation,” Jean-Claude Trichet, the president of the European Central Bank, said after the meeting. “We do not have a federal budget.” Last week, Ireland moved to guarantee both deposits and other liabilities at six major banks. There was grumbling in London and Berlin about the move giving those banks an unfair advantage. But Germany proposed its deposit guarantee Sunday after Britain raised its guarantee. The German officials emphasized that the guarantee applied only to private depositors, not to the banks themselves. But on Monday, Mr. Steinbrück said the government was considering an “umbrella” to protect the banking sector. Unlike in the United States, where deposits are now fully guaranteed up to a limit of $250,000 — a figure that was raised from $100,000 last week — deposits in most European countries have been only partly guaranteed, sometimes by groups of banks rather than governments. In Germany, the first 90 percent of deposits up to 20,000 euros, or about $27,000, was guaranteed. Even before the Paris meeting began it was becoming clear that two bailouts announced the week before had not succeeded and that UniCredit, a major Italian bank, might be in trouble. UniCredit announced plans on Sunday to raise as much as 6.6 billion euros. Fortis, which only a week ago received 11.2 billion euros from the governments of the Netherlands, Belgium and Luxembourg, was unable to continue its operations. On Friday, the Dutch government seized its operations in that country, and late Sunday night the Belgian government helped to arrange for BNP Paribas, the French bank, to take control of the company for 14.5 billion euros, or about $20 billion. In Berlin, the government arranged a week ago for major banks to lend 35 billion euros to Hypo Real Estate, but that fell apart when the banks concluded that far more money would be needed. Late Sunday night the government said a package of 50 billion euros had been arranged, with both the government and other banks taking part. The credit crisis began in the United States, a fact that has led European politicians to assert superiority for their countries’ financial systems, in contrast to what Silvio Berlusconi, the prime minister of Italy, called the “speculative capitalism” of the United States. On Saturday, Gordon Brown, the British prime minister, said the crisis “has come from America,” and Mr. Berlusconi bemoaned the lack of business ethics that had been exposed by the crisis. Many of the European banks’ problems have stemmed from bad loans in Europe, and Fortis got into trouble in part by borrowing money to make a major acquisition. But activities in the United States have played a role. Bankers said Sunday that the need for additional money at Hypo came from newly discovered guarantees it had issued to back American municipal bonds that it had sold to investors. The credit market worries came on top of heightening concerns about economic growth in Europe and the United States. “Unless there is a material easing of credit conditions,” said Bob Elliott of Bridgewater Associates, an American money management firm, after retail sales figures were announced, “it is unlikely that demand will turn around soon.” Henry M. Paulson Jr., the United States Treasury secretary, hoped that approval of the American bailout, which involved buying securities from banks at more than their current market value, would free up credit by making cash available for banks to lend and by reassuring participants in the credit markets. But that did not happen last week. Instead, credit grew more expensive and harder to get as investors became more skittish about buying commercial paper, essentially short-term loans to companies. Rates on such loans rose so fast that some feared the market could essentially close, leaving it to already-stressed banks to provide short-term corporate loans. Europe’s need to scramble is in part the legacy of a decision to establish the euro, which 15 countries now use, but not follow up with a parallel system of cross-border regulation and oversight of private banks. “First we had economic integration, then we had monetary integration,” said Sylvester Eijffinger, a member of the monetary expert panel advising the European Parliament. “But we never developed the parallel political and regulatory integration that would allow us to face a crisis like the one we are facing today.” In Brussels, Daniel Gros, director of the Center for European Policy Studies, agreed. “Maybe they will be shocked into thinking more strategically instead of running behind events,” he said. “The later you come, the higher the bill.” While the European Central Bank has power over interest rates and broader monetary policy, it was never granted parallel oversight of private banks, leaving that task to dozens of regulators across the Continent. This patchwork system includes national central banks in each of the euro zone’s 15 members and they still retain broad powers within their own borders, further complicating any regional approach to problem-solving. “The European banking landscape was transformed fairly recently,” Mr. Pisani-Ferry said. “When the euro was first introduced, the question of cross-border regulation didn’t really arise.” Optimists say one potential long-term benefit from the current turmoil is that it often takes a crisis to propel European integration forward. “Progress in Europe is usually the result of a crisis,” Mr. Eijffinger said. “This could be one of those rare moments in E.U. history.”

Laurentian thrives in trying times PETER HADEKEL, Freelance Published: 7 hours ago In the midst of the worst banking crisis in decades, small, regional-based Laurentian Bank is beating the pants off its much larger rivals. Earnings are up more than 30 per cent so far this year, and Laurentian stock has risen 37 per cent since January. That compares with a 14-per- cent decline for Bank of Montreal shares, a one-per-cent drop at Royal Bank and a 21-per-cent fall at CIBC. The TMX financials index is down nine per cent over the same period. Laurentian has plenty of cash and its capital ratio is among the best in the industry, Réjean Robitaille says. So much for the talk that a small financial institution could not survive in an age of behemoths. Laurentian, the country's seventh-largest bank, had only a tiny exposure to the asset-backed commercial paper market that collapsed in Canada and no exposure to the U.S. mortgage market. It's one of the few feel-good stories in the current financial mayhem. In contrast, big mortgage lenders and an investment bank in the U.S. have gone down, and huge writeoffs have been taken at most of the big banks in Canada. "It's bad," Laurentian CEO Réjean Robitaille said yesterday when I asked him about the troubles hitting the financial system. This week, the U.S. nationalized mortgage lenders Fannie Mae and Freddie Mac, while investment bank Lehman Brothers teetered on the brink. But investors shouldn't lump all financial institutions together, he says. In this case, small really is beautiful. "Look around the world, there's a lot of institutions that may not have the same size as others but that are doing quite well. Why is that? Because they have a good focus, and strong execution. "Look at what happened in the United States to the big players. ''Nobody four or five years ago would have said that Bear Stearns or Lehman Brothers" would get into trouble, Robitaille said. Clearly, being a giant is no advantage right now. Laurentian may not have the same scale as some of its rivals, but it can react more quickly. Give it credit for making some smart moves. Its total exposure to the troubled non-bank, asset-backed commercial paper market, frozen last year under the so-called Montreal Accord, is just $20 million. Of that amount, about $4.3 million has been written off. It wasn't dumb luck. The Laurentian credit committee wasn't comfortable with the ABCP market or with other exotic securities that other banks piled into, Robitaille said. "We've got a lower risk profile. ... We weren't in subprime lending or structured investment vehicles or derivatives," he said, rhyming off some of the complex products that have backfired on bigger banks. As a result, the balance sheet is strong and conservatively funded to a large extent by personal deposits. Laurentian has plenty of cash - about $4.5 billion - and its capital ratio is among the best in the industry, Robitaille says. In this case, lack of ambition has served it well. Five years ago, it sold 57 branches in Ontario to TD Bank, deciding that it couldn't afford to spread itself too thin. "We can't be everything to everyone," Robitaille says. The bank has identified three areas where it's focusing its energy and investment. These include the retail and small business market in Quebec, commercial real estate lending across Canada and financial products marketed to independent financial advisers. The bank also maintains a foothold in the investment business through Laurentian Bank Securities. Ironically, given the troubles banks have had in housing in the U.S., Laurentian is doing well by securitizing mortgages in Canada. It packages federally insured Canada Mortgage and Housing Corp. home loans for resale to investors, earning a profitable spread when it does so. "It's a very good product," Robitaille says, and this has turned out to be "the cheapest way to fund the bank." Third-quarter earnings per share were a record for Laurentian. "In a challenging year for banks, this is exceptional," said Desjardins Securities analyst Michael Goldberg in a research note. phadekel@videotron.ca

Canadian Commercial Paper Plan Likely to Be Approved By Joe Schneider June 3 (Bloomberg) -- A Canadian judge will probably approve a plan to convert C$32 billion ($31.8 billion) of frozen commercial paper to new notes by the end of the week, though court appeals may keep investors waiting months to get their money back. ``I will have a decision with reasons by Friday,'' Ontario Superior Court Judge Colin Campbell said at the end of a hearing in Toronto today. ``I'll approve,'' unless there's something in his notes that convinces him to change his mind, the judge said. Lawyers representing some of the noteholders have already indicated they plan to appeal Campbell's ruling once it comes out. Some investors object to the plan's limitations on lawsuits targeted at the banks and brokers that sold the paper, which hasn't traded since August. James Woods, who represents 18 companies that want to sue including pharmacy chain Jean Coutu Group Inc., said if the judge rules as he indicated, his group will likely file to the Court of Appeal. ``If we find fraud against banks that are not ABCP dealers, there is no recourse,'' Woods said, urging the judge to reject the proposal at today's hearing. ``It's inconceivable.'' New notes may be issued as early as the end of June if there are no appeals, said Purdy Crawford, a lawyer who led a group of foreign and Canadian banks and pension funds that drafted the proposal. All appeals must be exhausted before the notes are issued, he said. Quick Appeal ``We can't close until we get the sanction,'' Crawford told reporters. ``I am assured by our lawyers that the Court of Appeal will agree to an expedited hearing.'' The insolvent asset-backed paper hasn't traded since August, when investors shunned the debt on concerns about links to high-risk mortgage loans in the U.S. A group of foreign banks as well as Canadian lenders and pension funds led by Caisse de Depot et Placement du Quebec negotiated the so-called Montreal Proposal in August. The plan would convert the insolvent 30- to 90-day debt into new notes maturing within nine years. Banks agreed to provide funding to back the new notes on the condition that they be given immunity from any lawsuits stemming from the sale of the notes. Campbell said in a May 16 ruling he wasn't satisfied protection from lawsuits over potentially criminal conduct such as fraud was fair, and he delayed approval. The banks agreed to change the plan to allow limited suits under certain conditions within nine weeks following the plan's approval. Possible Fraud Campbell criticized the lawyers opposing the plan for failing to provide examples of potential outstanding fraud. ``So we defeat the plan on the off chance that there is something out there?'' Campbell asked. Once the new notes are issued, investors can hold them to maturity or try to trade them in the secondary market. Some clients of Canaccord Capital Inc. will be paid in full for their debt, under an agreement announced by the Vancouver-based brokerage in April. The case is Between the Investors Represented on the Pan- Canadian Investors Committee for Third-Party Structured Asset- Backed Commercial Paper and Metcalfe & Mansfield Alternative Investments II Corp., 08-CL-7740, Ontario Superior Court of Justice (Toronto). To contact the reporters on this story: Joe Schneider in Toronto at jschneider5@bloomberg.net. http://www.bloomberg.com/index.html?Intro=intro3

Caisse-led bailout met with cautious optimism Central bank and Finance Minister welcome Montreal proposal TARA PERKINS and JOHN PARTRIDGE AND HEATHER SCOFFIELD August 17, 2007 Already coined the "Montreal proposal," the Caisse-led plan to bail out a battered $40-billion portion of the commercial paper market is not a sure-fire solution yet. Jerry Marriott, managing director of asset-backed securities at DBRS Ltd., was blunt when asked whether the proposal is a complete answer to the crisis in the third-party asset-backed commercial paper (ABCP) sector. "We don't know," he said in an interview yesterday. Many details of the rescue package still have to be worked out, and it needs more support. But the participants believe they have bought some time and a final deal is in the cards. The agreement was brokered yesterday by the Caisse de dépôt et placement du Québec during a series of meetings in Montreal. The other nine signatories range from heavyweight global banks such as Deutsche Bank AG and HSBC Holdings PLC to Canadian players such as National Bank. DBRS, the sole debt-rating agency to rate these securities in Canada, was present for the meetings but says it was not an active participant in devising the plan. DBRS has been taking some heat for its role in building up the sector. Key elements of the plan are to convert short-term debt into longer-term instruments, while also slapping a temporary moratorium on both investors trying to get their money out of the trusts and on issuers seeking financial injections from their lenders to keep the paper afloat. The third-party ABCP market - the portion of the ABCP market not administered by the banks - has been hammered by a sudden exodus of investors and a refusal by many banks and other lenders to honour agreements to provide backup liquidity. The Bank of Canada and Finance Minister Jim Flaherty put out statements yesterday welcoming the Montreal proposal. The plan to pursue an orderly restructuring of the Canadian ABCP market "provides an opportunity for parties to work through the many complex issues related to the market," the central bank said. It also welcomed confirmation from Canada's big banks that they will support their own bank-sponsored ABCP programs. The third-party segment accounts for about one-third of the total ABCP market, while the other two-thirds is dominated by bank-sponsored trusts. "Together, these initiatives should help support the functioning of financial markets in Canada," the central bank said. But sources suggested that the central bank and Finance Department were unimpressed that Canada's big banks weren't further involved in the initiatives to bail out the non-bank ABCP market. An escalating crisis would likely have led to a forced liquidation of the assets in these trusts - a situation that could spread trouble into the broader economy. Mr. Flaherty said in a press release that it's "in the best interest of all involved that sponsors, liquidity providers (including large international banks) and investors (including large pension funds) engage constructively to pursue orderly market solutions to this liquidity situation." He added that one of the attractive features of the proposal is that it "provides time for full information and analysis of these securities." The creation of the long-term notes, which might carry maturities as long as 10 years, is expected to reduce the amount of liquidity risk in the ABCP market, Huston Loke, head of global structured finance at DBRS, said yesterday. Dealers that are part of the consortium have indicated that they would assist in making a market for these notes, "so should implementation of the proposal be successful, it is likely that investors looking to liquidate could do so at a time of their choosing, reducing the likelihood of selling at distressed prices or into a highly volatile credit environment," he said.