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Bank of Nova Scotia, Toronto-Dominion Bank and Bank of Montreal have bucked conventional wisdom and decided to keep three of the very first series of rate-reset shares that are nearing their anniversary.
Bank of Nova Scotia, Toronto-Dominion Bank and Bank of Montreal have bucked conventional wisdom and decided to keep three of the very first series of rate-reset shares that are nearing their anniversary.
(MARK BLINCH/REUTERS)

Banking

To retain or redeem rate-reset preferred shares?

Canada’s banks must soon decide what to do with the deluge of preferred shares that are about to come due.

In the heat of the financial crisis, the banks sold a slew of so-called rate-reset preferred shares. By the end of 2014, about $7-billion worth of these securities will hit their five-year anniversary – dates at which the banks must decide if they want to keep them in the market, or cough up the cash to redeem them.