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The Canada Pension Plan Investment Board eked out a gain of 0.2 per cent in a fiscal second quarter that was tough for investors, adding $1-billion to the fund’s assets in spite of broad weakness in public and private equities as well as fixed income markets. CPPIB’s investment returns outperformed The S&P Global LargeMidCap index, a measure of stocks CPPIB uses as 85 per cent of its benchmark reference portfolio, which fell 1.46 per cent in the quarter in Canadian-dollar terms. But CPPIB narrowly trailed the performance of Canadian defined-benefit pension plans in the quarter, in which assets were up 0.5 per cent, according to Royal Bank of Canada’s RBC I&TS All Plan Universe. In the first nine months of the year, those pension plans have lost 13.7 per cent. Gains in U.S. dollar-denominated investments, which were boosted by foreign exchange rates, and positive returns from energy and infrastructure investments helped keep returns positive after CPPIB lost $23-billion in the...

Homes on Sherman Brock Circle in Newmarket, Ont. on Mar 30, 2021. Fred Lum/the Globe and Mail Canada’s financial system should be able to weather a period of heightened stress, but many recent home buyers could experience a “painful” squeeze as interest rates continue to rise, the Bank of Canada’s second-in-command said Tuesday. In a speech in Ottawa, senior deputy governor Carolyn Rogers said long-standing vulnerabilities in Canada’s housing market worsened through the COVID-19 pandemic as home prices soared and buyers increasingly relied on variable-rate mortgages, which are linked to the central bank’s benchmark lending rate. Now that interest rates are rising and home prices are falling, many of these home buyers are experiencing a nasty adjustment, Ms. Rogers said. The most common variable-rate product has fixed monthly payments. With every interest rate hike, more of the borrower’s monthly payment goes toward interest. However, when the monthly payment no longer covers any prin...

Minister of Finance Chrystia Freeland holds a news conference on the second day of the Liberal cabinet retreat in Ottawa on Sept. 15, 2020. Sean Kilpatrick/The Canadian Press When Deputy Prime Minister Chrystia Freeland called the chief executive officers of Canada’s Big Six banks on the Sunday in February before her government invoked the Emergencies Act, CEOs stressed that the tools they had to help choke off money pouring in to support the convoy protests were limited. At that moment, banks needed court orders to freeze funds, the CEOs said, which are slow to be granted. To give banks the power to freeze funds faster, the government needed to sanction the protesters under the same anti-financial-crime laws it uses for terrorists, three CEOs said. They also urged the government to plug gaps in systems for monitoring transactions by bringing in a broader range of payments providers under stricter regulations. Accounts of at least three calls Ms. Freeland held with bank CEOs over an ...

Bank towers are shown from Bay Street in Toronto's financial district. Adrien Veczan/The Canadian Press Canada’s major banks wrapped up their fiscal year on an uneasy note, with a boost to profit margins from rising interest rates offset by inflated costs and gradual increases in loan losses as customers start to feel the strain from higher borrowing costs. Five of the six largest lenders reported fiscal fourth-quarter profits that were flat or lower than a year ago, and three of them – Bank of Montreal, BMO-T Canadian Imperial Bank of Commerce CM-T and National Bank of Canada NA-T – fell short of analysts’ earnings estimates. The outlier was Toronto-Dominion Bank, TD-N a lender that is rich in deposits and posted large increases in the margins it earned on loans – the difference between what it charges borrowers and pays on deposits. That helped drive retail banking revenues higher. In the 2023 fiscal year, banks are expecting to be dealt a tougher economic hand. Several bank CE...

Bank towers are shown from Bay Street in Toronto's financial district. Adrien Veczan/The Canadian Press Canada’s major banks wrapped up their fiscal year on an uneasy note, with a boost to profit margins from rising interest rates offset by inflated costs and gradual increases in loan losses as customers start to feel the strain from higher borrowing costs. Five of the six largest lenders reported fiscal fourth-quarter profits that were flat or lower than a year ago, and three of them – Bank of Montreal, BMO-T Canadian Imperial Bank of Commerce CM-T and National Bank of Canada NA-T – fell short of analysts’ earnings estimates. The outlier was Toronto-Dominion Bank, TD-N a lender that is rich in deposits and posted large increases in the margins it earned on loans – the difference between what it charges borrowers and pays on deposits. That helped drive retail banking revenues higher. In the 2023 fiscal year, banks are expecting to be dealt a tougher economic hand. Several bank CE...

Bank towers are shown from Bay Street in Toronto's financial district. Adrien Veczan/The Canadian Press Canada’s major banks wrapped up their fiscal year on an uneasy note, with a boost to profit margins from rising interest rates offset by inflated costs and gradual increases in loan losses as customers start to feel the strain from higher borrowing costs. Five of the six largest lenders reported fiscal fourth-quarter profits that were flat or lower than a year ago, and three of them – Bank of Montreal, BMO-T Canadian Imperial Bank of Commerce CM-T and National Bank of Canada NA-T – fell short of analysts’ earnings estimates. The outlier was Toronto-Dominion Bank, TD-N a lender that is rich in deposits and posted large increases in the margins it earned on loans – the difference between what it charges borrowers and pays on deposits. That helped drive retail banking revenues higher. In the 2023 fiscal year, banks are expecting to be dealt a tougher economic hand. Several bank CE...

HSBC is cutting as many as 15% of its 2,000 senior operations managers worldwide, as it attempts to streamline its management ranks and reduce costs, two sources with knowledge of the matter said. The global job cuts at the London-headquartered bank will fall across several business units and geographical locations and result in the loss of at least 200 positions, mostly with the title of Chief Operating Officer (COO), the sources said. HSBC, which used to position itself as the world’s local bank, employs many COOs because country and business lines have their own separate COO, the sources said. HSBC declined to comment. The lender has been shrinking its sprawling global business for several years, downsizing in many regions and exiting some countries entirely as it tries to improve shareholder returns. The latest cuts are already under way, one of the sources said. CEO Noel Quinn said on Thursday HSBC has identified $1.7 billion of extra cost cuts it will make next year as it battl...

A home for sale in the Rosedale neighbourhood in Toronto on June 21, 2012. Fred Lum/Tausi Insider The share of mortgages with ultralong amortization periods has rapidly increased to about 30 per cent of home loans at some of Canada’s biggest banks, another sign borrowers are struggling with higher interest rates. At Bank of Montreal, the proportion of residential mortgages with amortization periods longer than 30 years reached 31.3 per cent last month. At Canadian Imperial Bank of Commerce the share was 30 per cent and at Royal Bank of Canada it was 27 per cent, according to the three lenders’ latest quarterly results, released this week. That is up from the end of July, when 30-year-plus mortgages accounted for one quarter of each of the three banks’ residential mortgage portfolios. And the July numbers were a significant increase from the end of April, when those loans made up 10.6 per cent of BMO’s portfolio and 12 per cent of mortgages at RBC and CIBC. In October, 2021, before t...

Never in my 15 years of watching interest rates have I seen a lender spur mortgage competition like HSBC’s Canadian unit. But with Royal Bank of Canada’s planned acquisition of HSBC Bank Canada, the mortgage business could regress, costing consumers far too much. Why HSBC matters Consider one example. As I’m writing this, HSBC Canada’s uninsured five-year fixed rate is 5.29 per cent , the best of any national lender. That’s a whopping 40 basis points below RBC, its proposed acquirer, which advertises a “special offer” of 5.69 per cent . RBC’s uninsured five-year rate is the fourth-highest of the 27 national lenders I track. (There are 100 basis points, or bps, in a percentage point.) Were you buying Canada’s average $644,643 home with 20-per-cent down (that is, a $515,715 mortgage), and had you paid RBC’s advertised discounted rate, that 40 bps would cost you almost $10,000 more interest over five years. Now, most smart people refuse to pay big bank’s “special offer” rates. Qualifie...

As TC Energy Corp TRP-T prepares to unload C$5-billion (US$3.7-billion) in assets next year, investors and analysts say the North American pipeline operator has plenty of options without touching its core gas business. Chief executive Francois Poirier cleared up any ambiguities this week when asked how much of TC’s portfolio is in the shop window. “I remember reading a book once called Sacred Cows Make the Best Burgers ,” Mr. Poirier said at the company’s investor day. “There are no sacred cows.” Calgary, Alta.-based TC is widely known for its Keystone oil pipeline, a critical artery for moving Canadian oil to U.S. refiners that dominated headlines over the past decade for an expansion that ultimately failed. But moving natural gas around the United States, Canada and Mexico is the bigger part of TC’s business. TC should consider selling Keystone along with its stake in Ontario’s Bruce Power nuclear facility, since they are not part of its core business, said Rob Thummel, senior port...

Canada’s largest pension fund CPP Investments (CPPI) is set to raise C$500 million ($372 million) in its first “reverse inquiry” bond, a debt instrument that is issued in response to investor demand, a top official told Reuters. The bond offer gives Canadian institutional investors a rare opportunity to buy into the pension manager’s debt at an attractive coupon. The offer is unique as it is tailored according to the terms determined by the investors or bond dealers instead of an issuer. It is the first such bond issued by a pension fund in Canada, and is popular among provinces tapping debt markets. “What we are really attempting to do here is to provide investors greater flexibility by providing stronger voice in the program by providing revise inquiry,” Sam Dorri, Managing Director, Financing CPPI to Reuters. CPPI’s three-year bond will open on Dec. 6 and offer a coupon of 3.95% with interest paid out twice a year, Dorri added. In the last couple of months, some bonds in Canada ha...

National Bank of Canada no longer allows customers to transfer their existing mortgages after purchasing new properties, meaning clients hoping to move to new homes can’t hold on to low interest rates locked in before the recent surge in borrowing costs. The change, which applies nationwide, was implemented on June 30 as part of “a regular review” of the bank’s service offerings, National Bank spokesperson Alexandre Guay said in an e-mail. The lender did not answer a question about whether it had alerted clients who might be affected by the decision, but Mr. Guay noted that the move “did not involve any modifications to mortgage contracts, which must be communicated formally.” In an e-mail to a borrower reviewed by Tausi Insider, National Bank said it had stopped offering rollover mortgages, which it described as a “financing solution” that allowed borrowers to transfer the interest rate, remaining balance and remaining term of an existing mortgage to a new loan. The feature, which i...

RBC is buying HSBC's Canadian unit in the largest domestic banking deal on record. Duane Cole/Mark Blinch/Tausi Insider Getting caught up on a week that got away? Here’s your weekly digest of The Globe’s most essential business and investing stories, with insights and analysis from the pros, stock tips, portfolio strategies and more. RBC buys HSBC Canada in the country’s largest bank deal Royal Bank of Canada is buying HSBC Bank Canada for $13.5-billion in the biggest domestic banking deal on record, bolstering RBC’s position as the country’s largest institution in the industry. As James Bradshaw reports, Canadian banks have been eyeing the transaction for years. HSBC Canada, a subsidiary of Britain-based giant HSBC Holdings PLC and the seventh-largest bank in the country by assets, has strengths in commercial lending and mortgages and has been consistently profitable. If approved, the deal would extend RBC’s lead over competitor banks by tens of billions of dollars in both loan...