Happy New Year! Here are the top reads on deals and financial services over the last 24 hours,
Barrick’s new CEO defends head-office job cuts as Randgold acquisition closes: Barrick Gold Corp.’s new chief executive officer defended the company’s decision to lay off more than half of the staff at its Toronto head office before Christmas, saying it was a necessary move in a difficult market. Barrick issued layoff notices to about 95 people at its headquarters in December, bringing its headcount down to about 65 people, The Globe and Mail reported on Dec. 21. In an interview, CEO Mark Bristow said there are no plans to shut the office entirely, adding that a continuing staff is needed to carry out treasury services, human resources and accounting. In another sign of Barrick’s diminished presence in the country, the gold miner announced a revamped board of directors on which only one of nine members is Canadian. Story (Niall McGee, for subscribers)
Why investment banks are faring badly in the war for young talent: Every year, while speaking to third- and fourth-year bachelor of commerce students, Ellen O’Brien poses the following question: Who here has landed a position at an investment bank? Each time, a number of hands shoot up. Then, Ms. O’Brien – who is a director at financial services recruitment firm Vlaad and Co. Inc. – asks a follow-up question: Who here sees investment banking as a stepping stone to private equity? Typically all of the hands stay up. “These individuals have already made the decision that they’re not going to stay in banking,” Ms. O’Brien said. “They see it as a training ground.” Story (Alexandra Posadzki, for subscribers)
True North Mortgage seeking banking licence to launch Think Bank: One of Canada’s largest mortgage brokerages, True North Mortgage Inc., has applied for a licence to open a bank in a bid to expand its range of products. The Calgary-based brokerage, which opened in 1999, is planning to create a wholly owned subsidiary called Think Bank to offer certain retail-banking and mortgage services, and intends to launch the new company either this year or in 2020, subject to approval from regulators. Story (James Bradshaw, for subscribers)
Wealthsimple to launch mutual-fund investment firm with in-house advisers: Robo-adviser Wealthsimple Inc. is launching a mutual-fund investment firm with its own financial advisers in a move that takes it beyond its online-investing roots. The company is set to announce on Thursday the creation of Wealthsimple Advisor Services Inc. Registered with the Mutual Fund Dealers Association, the new firm will give MFDA-licensed advisers access to in-house services to run their independent businesses under the Wealthsimple banner, including portfolios that contain exchange-traded funds (ETFs), investments that have proven difficult for MFDA firms to purchase. Story (Clare O’Hara, for subscribers)
Economic uncertainty threatens to stall M&A activity: Unpredictability on the trade and economic fronts threatens to temper Canadian merger and acquisition activity in 2019, as corporate buyers reassess the risks of making big deals. The deal flow hit a record in the third quarter of 2018, and there is still keen interest in corporate purchases, with more than US$1-trillion in private capital seeking opportunities globally. However, some deal-making veterans question how much support public markets in Canada have for major transactions, in the form of putting up capital, after a year in which major stock indexes declined. Story (Jeffrey Jones and Alexandra Posadzki, for subscribers)
Commercial loan growth increases at Canada’s banks: Almost without interruption, commercial lending by the Big Six banks has increased rapidly since the country emerged from the last financial crisis – at a compound annual rate of roughly 9 per cent over the past eight years. The trend continued in the fourth quarter of 2018, when Canadian commercial loans were 11.3 per cent higher than a year earlier. Story (James Bradshaw, for subscribers)
Canadian bank stocks have seldom looked this enticing: Add Canadian banks to the long list of stocks that delivered dismal returns in 2018. But some encouraging developments have emerged from the sell-off: Valuations are low and dividend yields have risen to 4.6 per cent on average, pointing to a good buying opportunity right now. Story (David Berman, for subscribers)
Why all Canadians should care about open banking: Open banking is getting press around the globe and even nosed out “Blockchain” as topic du jour at this season’s major banking and fintech conferences. Despite the hype, most Canadians haven’t yet heard of open banking, much less thought about its potential to fundamentally change the financial services landscape and improve their banking experiences. Opinion (Lisa Shields)
MORE FINANCIAL SERVICES NEWS
Italy: The European Central Bank took control of a troubled Italian bank Wednesday, an unprecedented step that spotlighted the risks to the Eurozone’s financial system from political chaos in Rome and a sputtering economy. Story (for subscribers)
MORE DEALS NEWS
Dropped takeover: Stingray Group Inc. has dropped its takeover attempt of American rival Music Choice and adopted a different strategy for entering the U.S. market after winning a breakthrough contract with a client that operates cable systems in 21 states. Story
IN CASE YOU MISSED IT
The danger of being left behind: How I made the mid-career leap from banker to digital evangelist: I was in Tel Aviv on vacation a number of years ago with my wife and was so inspired by the city. It’s miles away from all of the major business centres, yet it transformed itself into one of the hottest startup hubs in the world. It is the David who is showing the well-financed Goliaths what innovation is all about. Surrounded by all these risk-takers, with their can-do spirit, made me question my career and reflect on whether I still had the skills to thrive in the digital era. I spent 20 years in banking. And, while I expected economic cycles, I did not anticipate two key global events: the financial crisis (no ordinary cycle) and the digital revolution. Opinion (Kevin Fairs)
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