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Streetwise

News and analysis on Bay Street and the world of finance
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Entry archive:

HSBC results a good sign for Big Six heading into reporting season

DAVID BERMAN

If HSBC Bank Canada’s quarterly results say anything about the impending reporting season for the Big Six, it’s that the industry’s worst fears are unfounded.

That is, if you think the big banks are about to feel some pain related to falling interest rates, a competitive mortgage market or rising consumer debt, HSBC’s results suggest that these issues have yet to make much of an impact – offering a potentially soothing report three weeks ahead of the fiscal second-quarter kickoff by Bank of Montreal on May 27.

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GMP should settle on the future of its wealth manager

TIM KILADZE

Under pressure to boost its sinking stock price, GMP Capital Inc. is bound to start fielding questions about the future of Richardson GMP, its wealth management arm.

The asset manager, a third of which is owned by the independent dealer, is one of the last remaining vestiges of the era before banks came to dominate wealth management. Canada’s Big Six lenders have all but scooped up all of the country’s independent money managers over the past decade. However, Richardson GMP and a few sizable others, such as Gluskin Sheff + Associates and the wealth arms of Canaccord Genuity and Raymond James, have stayed true to their non-bank roots.

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It’s time for independent banks to rethink their strategy

TIM KILADZE

The future for some of Canada’s independent investment banks has been so grim for so long, they feel like everyone is out to get them.

Considering it’s so ugly out there – GMP Capital Trust reported an $8.9-million quarterly loss last week, its second in a row – the depths of this frustration shouldn’t surprise anyone. But before independents wallow in their self-pity for too long, they had better remember that much of this pain is self-inflicted. Their rivals are playing hardball, that’s for sure – but they’ve also made missteps of their own.

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BCE to outsource some investment management

JACQUELINE NELSON

BCE Inc. is shaking up its in-house pension fund manager Bimcor Inc., laying off several employees as a long-time leader retires.

Michael Boychuk, chief executive officer of Bimcor, is preparing to leave the company in June after 18 years spent in several roles. With his departure, Bimcor is outsourcing some investment management responsibilities in an effort to improve efficiency and reduce costs.

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With fee changes, TMX gets ahead of regulator

NIALL McGEE

TMX Group Ltd. is following the advice of the securities regulator and proposing changes to its stock-trading fee model that will see costs come down for active traders and raise the cost of doing business for high-frequency traders.

Effective June 1, TMX Group plans to rejig its so-called “maker-taker” model that will affect trading on the Toronto Stock Exchange, the TMX Venture Exchange and the TSX Alpha Exchange.

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Scotiabank closes Cencosud deal – but do they still want it?

DAVID BERMAN

Nearly 10 months after Bank of Nova Scotia announced it would acquire a controlling interest in the Chilean financial services division of Cencosud SA, a Latin American retailer, the lender announced Friday that the deal has been completed. The issue now: Figuring out whether Cencosud is much of a prize.

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Long-time Bay Street trader leaves ITG Canada

TIM KILADZE

The Canadian arm of Investment Technology Group Inc. has lost another one of its traders.

Jeff Gamble left the firm this week, according to people familiar with the move. His departure follows that of Mark Armstrong, another trader. Mr. Gamble had been with ITG since 2009, and he started working at the Toronto Stock Exchange in 1980.

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Success won’t come easy for BMO’s new U.S. co-heads

TIM KILADZE

Heavy are the heads that wear the crowns, and the two new co-leaders of Bank of Montreal’s U.S. personal and commercial banking business have some tough work ahead of them.

Come June, the U.S. P&C group will be run by two new people because the current head, Mark Furlong, is retiring. Dave Casper, the current head of commercial banking, and Alexandra Dousmanis-Curtis, the current head of U.S. retail banking, will assume joint leadership. They inherit a business that isn’t suffering by any means, but one that has yet to prove that its earnings power – something BMO is desperate to demonstrate.

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Lexpert: Hydro One estimates all over the map

LEXPERT

Lexpert identifies and reports on emerging business issues and practice areas in the business of law. Whether online, in our magazine or in the DealsWire e-newsletter, we chronicle deals and lawsuits of interest, and cover issues of broad concern to the legal profession and those who purchase legal services. We hope you enjoy this sample of our latest content.

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Canada's independent brokers under the gun – again

TIM KILADZE

Signs of carnage in Canada’s bifurcated capital markets are cropping up again, casting an even bigger shadow over the futures of independent dealers. All the more worrying: They have come back despite blockbuster underwriting fees.

Although independents such as GMP Capital Inc., Canaccord Genuity Group Inc. and FirstEnergy Capital Corp. have struggled to make money for many years, there is a new round of worries, prompted by new losses and layoffs.

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Ontario Teachers' principles tested in real estate tiff

JACQUELINE NELSON

A U.S. mall operator owned in part by Ontario Teachers’ Pension Plan is facing pressure from activist investors, but the company’s shareholder rights plan stands in opposition to Teachers’ publicly stated position on such measures.

Macerich Co., operator of more than 50 regional shopping centres in the United States, is facing off against some dissident investors in the wake of the company’s rejection of a $16.8-billion (U.S.) takeover bid from commercial real estate giant Simon Property Group Inc.

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Venture capital firms on the hunt for oil patch deals

JACQUELINE NELSON

New venture capital is circling Alberta as low oil prices put pressure on the energy tech sector’s major, historic investors – large energy companies.

On Tuesday, Kensington Capital Partners said it would put down roots in Calgary, hiring a new senior vice-president to lead the hunt for new investments.

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Canadian deals and investments are flying high

JACQUELINE NELSON

Private capital reached a high point in recent months, with Canadian private equity buyouts setting records in the first quarter and venture capital investments climbing.

Amid oil price declines and market enthusiasm for new public offerings, investors contributed to strong deal-making and investment results, according to a report from Thomson Reuters that details the first-quarter highlights in both the private equity and venture capital spaces.

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Gold sector CEO pay is through the roof – and it's embarrassing

TIM KILADZE

Someone needs to break the bad news to gold miners: their party’s all but over. If they keep paying their chief executives handsomely, there’s no chance they’ll win back the global investors they sought for so long.

After peaking in 2011, the S&P/TSX Gold Index has been decimated, losing 63 per cent of its value. Miraculously, though, boards of directors have barely noticed. Which is why, even after tens of billions of dollars worth of writedowns and rounds of executive upheaval, the gold sector’s chief executives still get paid through the roof.

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Bennett Jones lands Stikeman veteran

JEFF GRAY

Bennett Jones LLP is adding a veteran deal maker to its roster who made his career at Stikeman Elliott LLP: Brian Rose.

Bennett Jones announced in an internal e-mail on Monday that Mr. Rose – who spent nearly four decades at Stikeman Elliott before retiring in late 2013 – is joining the firm as a senior business adviser, based in New York.

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Energy strategist Michael Tran jumps to RBC from CIBC

NIALL McGEE

New York-based energy strategist Michael Tran has jumped from CIBC to RBC.

In his new role Mr. Tran, 32, will be covering supply and demand for the oil and gas industry. For the past six years, Mr. Tran worked as director of energy strategy with CIBC World Markets Corp. His position at RBC Dominion Securities Inc. will be director and commodities strategist. His first day was Monday.

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Veteran Calgary Gowlings energy lawyer heads to Dentons

JEFF GRAY

Veteran Calgary energy sector deal maker Patrick Burgess has left Gowling Lafleur Henderson LLP for Dentons Canada LLP, his new firm announced Monday.

Mr. Burgess, who has 30 years of experience in Calgary’s oil business, joins the Dentons energy transaction group as a partner. He has worked on deals for a variety of companies, large and small, Canadian and international, including acting for Calgary-based Crescent Point Energy Corp. in billions of dollars worth of acquisitions in recent years.

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GRI looks to Richard Nesbitt to expand global reach

JACQUELINE NELSON

Toronto-based Global Risk Institute in Financial Services is bringing on a banking veteran to help expand the international reach of its research.

Richard Nesbitt, former chief operating officer of CIBC, will take up the role of chief executive at the not-for-profit financial education group on Friday.

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Montreal media company Stingray unveils IPO

NICOLAS VAN PRAET

Montreal media company Stingray Digital Group is going public with a $120-million share offering, testing investor appetite for its lucrative business as its core television platform is under threat from alternatives such as Netflix.

The privately held company is best known in Canada for its flagship product Galaxie, a continuous, commercial-free music streaming service that has become a staple on pay TV channel lineups across the country and in 110 other nations. It filed plans with regulators on Friday to list shares on the Toronto Stock Exchange.

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OPTrust keeps an eye on risk amid investment gains

JACQUELINE NELSON

Amid strong returns in 2014, OPSEU Pension Trust is looking to ratchet down the amount of risk in its investment portfolio.

The fund, better known as OPTrust, said it earned a 12-per-cent return on its investments last year, net of external management fees, and saw its assets grow to $17.5-billion from $16-billion one year earlier. The pension plan has more than 86,000 beneficiaries and contributors who are Ontario government employees from the OPSEU union.

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Controversial CIBC director won’t seek re-election

DAVID MILSTEAD

Canadian Imperial Bank of Commerce shareholders’ meeting Thursday marks the end of the tenure of one of the bank’s more controversial directors.

Leslie Rahl is not standing for re-election after eight years on the CIBC board. Ms. Rahl drew the attention of governance activists and shareholder-advisory firms for her service on the board of the U.S. Federal National Mortgage Association, better known as Fannie Mae, as it collapsed in that country’s housing crisis. Ms. Rahl served on several of the company’s committees, including compliance and “risk policy and capital.”

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OSC ruling fuels stock exchange feud over ‘speed bumps’

TIM KILADZE

A ruling Tuesday by the Ontario Securities Commission is expected to add fuel to already-heated arguments over whether all stock exchanges with market “speed bumps” should be treated the same by regulators.

These speed bumps, made popular in Canada by a new stock exchange run by Aequitas Innovations Inc., are designed to create a level playing field with high frequency traders (HFTs). By slowing down high-speed trades, speed bumps purportedly eliminate any advantage such traders would have over average traders.

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Ambiguity, legal awkwardness of bitcoin complicates fraud lawsuit

ADRIAN MYERS

Some people think that bitcoin is the next Facebook for the guys who would have invented Facebook but, with the recent bankruptcies of bitcoin miners CoinTerra and Aquifer and the 2014 bankruptcy of the bitcoin exchange Mt. Gox, things don’t look so great for bitcoin proponents these days. Part of this is driven by the fact that bitcoin isn’t the quite as liquid and stable as its proponents once said.

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BMO restructures capital markets arm, cuts jobs, realigns roles

TIM KILADZE and LUKE KAWA

Bank of Montreal is quietly making strategic changes to its capital markets arm, announcing jobs cuts and a realignment of roles throughout the month of April.

In total, roughly 50 people have lost their jobs, according to people familiar with the situation – many of whom are senior professionals, including directors and managing directors.

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Why Canada’s banks care about ‘synthetic’ trade crackdown

TIM KILADZE

Bay Street is struggling to quantify how badly Canada’s banks will be hurt by Ottawa’s decision to tighten rules for arcane transactions known as ‘synthetic equity arrangements,’ but some people familiar with these trades stressed the impact should not be underestimated.

As part of the federal budget, Finance Minister Joe Oliver, who once worked on Bay Street, proposed preventing banks from making these arrangements in order to dodge taxes. At the moment, it is unclear how many Big Six banks still utilize these trades, which are conducted on what are known as “Delta One” desks, but they were once widely used.

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Pension funds to revisit 30-per-cent investment restriction

JACQUELINE NELSON

The federal government is reigniting a debate over whether to ease investment restrictions on some Canadian pension funds.

Tuesday’s budget included plans for a public consultation on whether to change rules that limit federally regulated pension funds from owning more than 30 per cent of the voting shares of a corporation. Pension groups and other stakeholders will now have a chance to weigh in on the merits and perils of reducing ownership restrictions that bind many pension funds across the country.

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Upstart energy firm tests investor appetite with $100-million share sale

JEFFREY JONES

Deventa Energy Inc., a small, private energy company, is pounding the pavement looking for $100-million in a big test of investor appetite for early-stage Canadian energy plays in a depressed market.

Deventa has assembled a sizable land position in the southern part of the prolific Alberta Montney region and is now looking for capital to start drilling $10-million horizontal wells.

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Dragons' Den star Wekerle facing $1.3-million lawsuit for wrongful dismissal, assault

NIALL McGEE

Michael Wekerle is being sued by his former personal shopper who alleges Mr. Wekerle fired him from a snazzy high-end Toronto clothing store last year without cause, and failed to pay him profits in the store he says he was a part-owner in.

Peter Halpin also alleges the star of CBC’s Dragons' Den and CEO of Difference Capital Financial Inc. had him forcibly removed from the Da Zoo clothing store in May, 2014, and assaulted him. Mr. Halpin is asking for $1.3-million in damages, including $100,000 for assault and battery.

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Three ways this budget may whack bank profits

DAVID BERMAN

The Conservative government’s 2015 budget was short on specifics for how Ottawa would ensure that taxpayers won’t have to bail out systemically important banks during the next financial crisis. That came as a surprise to some observers who had expected more clarity on the Taxpayer Protection and Bank Recapitalization Scheme after consultations were launched in August.

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Caisse wins rare job protections for Quebec in Cirque du Soleil deal

JACQUIE McNISH AND NICOLAS VAN PRAET

The business of acquiring Quebec companies could become more onerous if the $1.5-billion takeover of Cirque du Soleil is approved by regulators.

According to people familiar with the fine print of the planned acquisition, private equity giants TPG Capital and Fosun Capital Group have committed to some of the toughest job protections yet seen in Canada. If the deal is approved by regulators over the next few months, it’s a good bet future suitors will be hearing similar proposals at the Quebec deal table.

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Jeffrey Jones

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Jeffrey Jones is a veteran journalist specializing in energy, finance and environment for The Globe and Mail’s Report on Business, based in Calgary.

Follow Jeffrey on Twitter @the_Jeff_Jones

Niall McGee

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Niall McGee is a Streetwise reporter. He was previously a reporter and segment producer at Business News Network (BNN).

Follow Niall on Twitter @niallcmcgee

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