e425
Filed by The Toronto-Dominion Bank
Pursuant to Rule 425 under the Securities Act of 1933
and deemed filed pursuant to Rule 14a-12 under the
Securities Exchange Act of 1934
Subject Company: The South Financial Group, Inc.
Commission File No.: 0-15083
This filing, which includes (i) communications made available to employees of The
Toronto-Dominion Bank and/or TD Bank, Americas Most Convenient Bank on May 18, 2010 or May 19,
2010 and (ii) print advertisements run in regional publications commencing on or about May 17,
2010 and (iii) information sent to investors and made available on the internet website of The
Toronto-Dominion Bank on May 19, 2010, may contain forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995 and comparable safe harbour provisions of applicable Canadian
legislation, including, but not limited to, statements relating to anticipated financial and
operating results, the companies plans, objectives, expectations and intentions, cost savings and
other statements, including words such as anticipate, believe, plan, estimate, expect,
intend, will, should, may, and other similar expressions. Such statements are based upon
the current beliefs and expectations of our management and involve a number of significant risks
and uncertainties. Actual results may differ materially from the results anticipated in these
forward-looking statements. The following factors, among others, could cause or contribute to such
material differences: the ability to obtain the approval of the transaction by The South Financial
Group, Inc. shareholders; the ability to realize the expected synergies resulting from the
transaction in the amounts or in the timeframe anticipated; the ability to integrate The South
Financial Group, Inc.s businesses into those of The Toronto-Dominion Bank in a timely and
cost-efficient manner; and the ability to obtain governmental approvals of the transaction or to
satisfy other conditions to the transaction on the proposed terms and timeframe. Additional
factors that could cause The Toronto-Dominion Banks and The South Financial Group, Inc.s results
to differ materially from those described in the forward-looking statements can be found in the
2009 Annual Report on Form 40-F for The Toronto-Dominion Bank and the 2009 Annual Report on Form
10-K of The South Financial Group, Inc. filed with the Securities and Exchange Commission and
available at the Securities and Exchange Commissions Internet site (http://www.sec.gov).
The proposed merger transaction involving The Toronto-Dominion Bank and The South Financial
Group, Inc. will be submitted to The South Financial Group, Inc.s shareholders for their
consideration. Shareholders are encouraged to read the proxy statement/prospectus regarding the
proposed transaction when it becomes available because it will contain important information.
Shareholders will be able to obtain a free copy of the proxy statement/prospectus, as well as other
filings containing information about The Toronto-Dominion Bank and The South Financial Group, Inc.,
without charge, at the SECs internet site (http://www.sec.gov). Copies of the proxy
statement/prospectus and the filings with the SEC that will be incorporated by reference in the
proxy statement/prospectus can also be obtained, when available, without charge, by directing a
request to The Toronto-Dominion Bank, 15th Floor, 66 Wellington Street West, Toronto, ON
M5K 1A2, Attention: Investor Relations, 1-866-486-4826, or to The South Financial Group, Inc.,
Investor Relations, 104 South Main Street Poinsett Plaza, 6th Floor, Greenville, South
Carolina 29602, 1-888-592-3001.
The Toronto-Dominion Bank, The South Financial Group, Inc., their respective directors and
executive officers and other persons may be deemed to be participants in the solicitation of
proxies in respect of the proposed transaction. Information regarding The Toronto-Dominion Banks
directors and executive officers is available in its Annual Report on Form 40-F for the year ended
October 31, 2009, which was filed with the Securities and Exchange Commission on December 03, 2009,
and in its notice of annual meeting and proxy circular for its most recent annual meeting, which
was filed with the Securities and Exchange Commission on February 25, 2010. Information regarding
The South Financial Group, Inc.s directors and executive officers is available in The South
Financial Group, Inc.s proxy statement for its most recent annual meeting, which was filed with
the Securities and Exchange Commission on April 07, 2010. Other information regarding the
participants in the proxy solicitation and a description of their direct and indirect interests, by
security holdings or otherwise, will be contained in the proxy statement/prospectus and other
relevant materials to be filed with the SEC when they become available.
THE
FOLLOWING IS A COMMUNICATION THAT WAS MADE AVAILABLE TO
EMPLOYEES OF
THE TORONTO-DOMINION BANK ON MAY 18, 2010
DAILY MEDIA ROUNDUP
Compiled by Corporate and Public Affairs
REVUE DE PRESSE QUOTIDIENNE
Compilé par Affaires internes et publiques
May 18, 2010/18 mai 2010 |
1. TD push deepens in U.S. South; Purchase of South Financials 176 branches adds to Florida,
South Carolina holdings The Globe and Mail
Toronto-Dominion Bank has catapulted into the top 10 among banks in Florida and South Carolina
after preying on the carcass of yet another lender that had fallen victim to the U.S. real-estate
bust. Ed Clark quoted; Bharat Masrani mentioned. Similar articles appear other publications
including The Globe and Mail (Streetwise blog), National Post, The Toronto Star, The Philadelphia
Inquirer, Philadelphia Business Journal, Finance et investissement, Investment Executive, Le
Devoir, Les Echos, Les Affaires, La Presse, Sun-Sentinel (Ft. Lauderdale), The Tampa Tribune,
Orlando Sentinel, The Charlotte Observer, Charlotte Business Journal, The Star Ledger (Newark, NJ),
Le Soleil (Quebec) Charleston Post Courier (SC), The State (Columbia, SC), Greenville News (SC),
NJBIZ, Metro, New Statesman, and from Bloomberg, The Canadian Press, and Reuters. See full
story
2. TD Bank to Buy Troubled South Financial For $191.6M Dow Jones
For the second time in a month, Toronto-Dominion Bank (TD), Canadas second-largest bank by assets,
scooped up a troubled U.S. bank, enabling it to expand its footprint in the U.S. southeast. Ed
Clark quoted. See full story
3. TD Banks Purchase Of South Financial Is A Boon For The FDIC Dow Jones
The sale of a small troubled bank in South Carolina means big things in the governments efforts to
close the nations most troubled lenders. See full story
4. With mergers, Canadian bank quickly becoming a power in Florida The Tampa Tribune
A Toronto-based banking giant has quickly become a power in Florida after buying three banks and
now eyeing Mercantile Bank. Kevin Gillen (Regional President, TD Bank). See full story
5. TD deal further bolsters Florida presence Philadelphia Business Journal
Just last month, TD Bank went from about 30 Florida branches to 100 with the addition of three
failed banks it acquired from federal regulators. Now with Mondays addition of struggling South
Financial Group, TD adds almost 70 more Florida branches and enters another key market in the
Sunshine State, Tampa. See full story
6. Deal to sell South Financial could face court challenge Greenville News (SC)
The chairman of South Financial Groups board of directors told The Greenville News he wont be
surprised if the deal to sell the banking company to Toronto-based TD Bank Financial Group faces a
shareholder challenge in court. Ed Clark and Bharat Masrani quoted. See full story
7. TD Bank officials in love with Greenville Greenville News (SC)
TD Bank officials have been to town, and fallen in love with Greenville, especially the pro
cycling events, said Ben Haskew, president of the Greenville Chamber of Commerce. See full
story
8. VIDEO CLIPS: Ed Clark, Colleen Johnston and Bernie Dorval interviews
Interviews with Ed Clark, Colleen Johnston and Bernie Dorval re: the announcement of TDs
acquisition of South Financial Group. See links to videos
9. Canadian business brands weathered recession well Ottawa Citizen
News and multimedia giant Thomson Reuters has shot to the pinnacle of a top 25 Canadian brands
ranking by Interbrand Canada. TD ranked second Best Canadian Brand. See full story
10. Harper sends G20 a warning on debt; Will urge fiscal discipline at meet National Post
Prime Minister Stephen Harper, worried that rising debt and deficits of some of the worlds largest
economies will derail the global economic recovery, said Monday that he will push G20 leaders next
month to commit themselves
to some benchmarks on the fiscal health of their national governments.
Craig Alexander quoted. This article also appears in The Vancouver Sun, Edmonton Journal,
StarPhoenix (Saskatoon), The Leader-Post (Regina), and Telegraph-Journal (Saint John, NB) See
full story
11. Tories launch global fight against bank tax The Globe and Mail
Canada is taking its campaign against a global bank levy on the road, part of an aggressive shift
in tactics by the Harper government to kill an initiative that risks becoming a distraction from
the Prime Ministers agenda at the G20 summit. See full story
12. Editorial: Banking on Mr. Flaherty The Globe and Mail
Jim Flaherty, the federal Minister of Finance, is right to be engaging in international diplomacy,
in order to resist the proposal for a global bank tax. See full story
13. Promise exceeds reality of financial reform bill The Globe and Mail
Capitol Hill insiders are betting this is the week the U.S. Senate finally okays a monster
financial reform overhaul bill. It would mark the last serious hurdle for the legislation, which
seeks to redraw the rules of bank regulation in the United States. See full story
14. Senators Seek Curbs On Foreign Bailouts The Wall Street Journal
The Senate approved Monday a measure that could make it harder to deploy U.S. funds in rescuing
foreign governments, signaling Congresss unease with the sort of global economic aid recently
given to Greece. See full story
15. This new credit crunch seems so déjà vu The Globe and Mail
Coming soon: Credit Crunch Part II. Early looks at the plot suggest it will be much the same as the
first time around, freshened up with the usual sequel tropes of different exotic locales and a few
new characters. Column written by Boyd Erman. See full story
16. Banking: Ready to rumble Canadian Business
Bay Street mergers are seldom easy, but Canaccords Paul Reynolds and David Kassie of Genuity say
theyre set to take on their biggest rivals (not each other). See full story
17. Dont forget the basics in rush to own a home Canwest News Service
The rush is on to buy a home before the mortgage rates go up too high and, in Ontario and British
Columbia, before the harmonized sales tax is introduced on July 1, pushing prices higher. Henry
Blumenthal (VP and Chief Underwriter, TD Insurance) quoted. See full story
18. More funding urged for post-secondary schools; Universities need to attract under-represented
groups, report says The Gazette (Montreal)
Post-secondary institutions need more money and better planning to meet the many pressures placed
on them, which include producing a more skilled workforce to keep Canada competitive in the global
economy, according to a report from TD Economics. Don Drummond quoted. This article also appears in
The Record (Sherbrooke, QC). Similar articles appear in Metro and The Toronto Star
(parentcentral.ca) See full story
19. Canadas $200-million lure pulls in 19 big-name researchers The Globe and Mail
A $200-million international recruitment drive is bringing 19 leading researchers to Canadian
campuses with multimillion-dollar grants that are setting off alarm bells over a potential brain
drain in other countries. Don Drummond quoted (online only). See full story
Looking for TDs view on articles about the bank or the financial industry? Visit TD News &
Views for background on some stories of the moment that may come up in your discussions with
customers, colleagues and friends.
Vous cherchez des opinions et des articles de la TD au sujet du secteur bancaire ou financier?
Visitez Nouvelles et Opinions de la TD pour y trouver de linformation sur certains sujets
dactualité qui peuvent
être évoqués dans vos discussions avec des clients, des collègues et des
amis.
Full Stories
1. TD push deepens in U.S. South; Purchase of South Financials 176 branches adds to Florida, South
Carolina holdings
The Globe and Mail
05/18/2010
TARA PERKINS
Pg. B3
Toronto-Dominion Bank has catapulted into the top 10 among banks in Florida and South Carolina
after preying on the carcass of yet another lender that had fallen victim to the U.S. real-estate
bust.
But unlike its purchase in April of three failed banks from the U.S. Federal Deposit Insurance
Corp., TD decided this time to make its move on its target, South Carolina-based South Financial
Group, before the lender collapsed and fell into government hands.
That makes this deal, which adds 176 branches at a cost of about $192- million (U.S.), riskier than
last months deals, in which the U.S. government agreed to share the pain if customers stopped
making payments on the loans that TD bought.
The deal, which takes TD into North Carolina the home base of Royal Bank of Canadas U.S. retail
bank also highlights the very different approaches that Canadas top two banks are taking south
of the border.
RBC took a look at South Financial, but had no desire to spend money on further U.S. real estate
exposure, sources say. Its not clear whether RBC would have bid had South Financial Group tumbled
into government hands. But bank executives say they would rather put resources toward building up
other parts of RBCs business namely wealth management while uncertainty persists in the U.S.
banking environment.
TD, on the other hand, has big ambitions for its U.S. consumer and commercial lending business.
Chief executive Ed Clark and U.S. head Bharat Masrani will be touring around Greenville, S.C.,
Tuesday, as they work to extend the TD brand into new areas.
TD promotes itself as the first truly North American bank. But Mr. Clark, who confirmed in an
interview Monday that he will likely retire in 2013, said his goal is not to build a behemoth bank
in the United States that spreads from coast to coast.
Wells [Fargo], Bank of America and Chase are that, he said. I think its unrealistic. Maybe 10
years from now another [TD] CEO can do that.
What Mr. Clark, 62, wants to leave as his legacy is solid positions in key markets, and a
customer-friendly growing bank that is fundamentally at the lower end of the risk spectrum, he
said. I think were there now.
South Financial Group has lost money every quarter over the past two years and has been forced to
issue huge amounts of equity to stay afloat. But it had already become apparent to South
Financials executives toward the end of 2009 that they were going to need more capital to get
through their problems, and they had been weighing possibilities ranging from deals with private
equity players to the one with TD Bank.
The bank would have done all it could to avoid a failure, said South Financial Groups CEO H. Lynn
Harton. It was my goal, the boards goal, the entire teams goal to do everything in our power to
make sure that was not
going to happen to us, he said in an interview.
This is a growth story. Rather than a traditional merger where theres overlap and the focus is
on cost savings, TD has a long-term growth perspective of investment building out the franchise,
growing this, and competing.
Mr. Harton has agreed to join TDs management team and will continue to be based in Greenville. Mr.
Clark said TD decided there was no value in waiting to see if South Financial failed. While that
might have allowed TD to strike a government-assisted deal, key personnel and customers might have
left, he said.
TDs offer, which requires approval from South Financials shareholders and is expected to close in
the third quarter, includes $61-million (U.S.) in cash and stock for South Financials
shareholders, and $131-million for the U.S. Treasury, which had bought preferred shares of the
beleaguered bank as part of its capital purchase program.
Return to Top
2. TD Bank to Buy Troubled South Financial For $191.6M
Dow Jones
05/18/2010
CAROLINE VAN HASSELT
For the second time in a month, Toronto-Dominion Bank (TD), Canadas second-largest bank by assets,
scooped up a troubled U.S. bank, enabling it to expand its footprint in the U.S. southeast.
The bank said it agreed to buy Greenville, S.C.-based South Financial Group Inc. (TSFG) for $191.6
million in cash or stock. The transaction, six months in the making, allows TD to enter South
Carolina and expand its recently acquired base in Florida.
Last month, TD bought three shuttered Florida banks Riverside National Bank, First Federal Bank
of North Florida and AmericanFirst Bank for $3.8 billion from the Federal Deposit Insurance
Corp. To outbid its competitors, TD was forced to accept less-than-favorable terms, agreeing to a
50-50 loss-sharing formula with the FDIC. The typical split is 80-20. This time, TD didnt wait for
the FDIC to close the ailing three-state bank.
This is a preemptive bid likely launched to ensure limited competition, says Brad Smith, an
analyst at Stonecap Securities Inc. in Toronto.
The deal could also signal a return to traditional, that is, non-FDIC, merger-and-acquisition
activity.
I think it marks a turning point in the consolidation of the market. FDIC transactions arent the
only game in town any more, says Terry Moore, managing director of Accentures North America
banking practice. With the economy showing some signs of strength, theres more confidence of
getting into the game. Theres a signficant number of diamonds in the rough that would fit nicely
within the strategic aspirations of a set of stronger banks, that include both U.S. and foreign
banks.
There are more than 700 U.S. banks, holding some $400 billion in assets, on the FDICs troubled
list. Foreign banks, including TD, Canadian rival Bank of Montreal (BMO) and Spains Banco Bilbao
Vizcaya Argentaria SA (BBVA), have all brokered deals with the FDIC.
Foreign banks are licking their chops at the U.S. market, Moore says. They didnt come here to
buy one institution. I think its conceivable that, over the next 12 months, well see a domino
effect, where consolidation
really picks up in the traditional market.
South Financial, the owner of Carolina First in the Carolinas and Mercantile Bank in Florida, sold
$347 million in preferred stock to the U.S. Treasury through the Troubled Asset Relief Program, or
TARP, to stay afloat after getting pummeled by its exposure to real estate in Florida. TD said it
is paying the U.S. Treasury $130.6 million for the preferred stock. The government has agreed to
discharge all accrued dividends.
Toronto-based TD is offering to pay 28 cents a share or 0.004 of a TD share for each South
Financial stock for a total of $61 million. The per-share price is a 58% discount to Fridays
closing price of 67 cents. The bank is also swapping 1,000 of its shares for South Financial voting
preferred stock to pick up 39.9% voting power. TD needs to secure 51% approval from shareholders.
There was a compromise on TARP and a price for the common shareholders, says TD Chief Executive
Ed Clark. The tipping-point positive was that we quite like the management team. Weve acquired a
solid set of lenders and a solid set of risk managers.
TD picks up 176 stores, including 66 in Florida that dont overlap with TDs other stores. It goes
from having nine branches in Florida in 2007 to 170. Weve always viewed Florida as a critical
state both for Canadian and northeastern customers going south, but we also liked Florida in its
own right because its an excellent souce of deposits, Clark says.
The bank, which is adding $9.8 billion in deposits, said it expects to take a $1 billion loan
write-down, mostly from soured commercial loans.
The transaction is expected to be completed by the end of August. TD said the deal will be
slightly accretive to fiscal 2011 earnings and reduce its Tier 1 capital by 40-50 basis points,
even after it issues, in connection with this acquisition, C$250 million in stock.
Clark said TD will absorb South Financial before embarking on other deals. You keep tilling the
grounds to see where do you want to go next, but I think we pause here for the summer unless the
FDIC surprises us and offers us something that we cant refuse, he says.
Return to Top
3. TD Banks Purchase Of South Financial Is A Boon For The FDIC
Dow Jones
05/18/2010
MARSHALL ECKBLAD
The sale of a small troubled bank in South Carolina means big things in the governments efforts to
close the nations most troubled lenders.
The Canadian lender Toronto-Dominion Bank (TD, TD.T) on Monday agreed to buy the teetering South
Financial Group (TSFG) for 28 cents a share, or less than half the 67 cents apiece South
Financials shares were fetching before the weekend.
More striking than TD Banks discount, however, is the conspicuous absence of the Federal Deposit
Insurance Corp.
The government regulator has closed more than 200 banks since the beginning of last year, soaking
up losses as it worked to find buyers for the banks, or at least some of their pieces. Now, its
benefiting from stronger lenders
growing interest in buying banks before, not after, they fail.
Institutions are becoming more interested in making acquisitions, including open bank
acquisitions, said FDIC spokesman Andrew Gray. Obviously, thats our preferred outcome, because
it saves the deposit fund money.
The trend also means bank regulators could see a smaller and smaller role in cleaning up the most
troubled banks. During the real estate boom, hundreds of smaller U.S. banks rushed headlong into
financing commercial real estate projects; when the bubble popped, many of those loans turned into
hefty losses.
During the worst days of the financial crisis, some of the biggest U.S. banks bought loss-riddled
competitors for next to nothing by waiting for the FDIC to first seize the struggling lenders, and
wipe out current shareholders. J.P. Morgan Chase & Co. (JPM) expanded coast-to-coast when it
purchased failed Washington Mutual Inc., for example, and PNC Financial Services Group Inc. (PNC)
bought Ohio rival National City Corp.
Back then, very few banks were willing to assume the risk of taking on a distressed bank, so
willing buyers could name ultra-friendly terms. Now, with the U.S. economy improving, bankers are
rushing to make sure they dont miss a chance to pick up competitorsand also their loans and
depositsfor cheap.
In fact, there are now so many bidders for failed banks that the most eager banks could follow TD
Banks model and start cutting deals with troubled banks that havent yet failed. The prices for
distressed banks, in other words, are fast becoming less distressed.
FDIC deals have become overheated very quickly, said Chris Marinac, managing principal at FIG
Partners. And regular-way mergers at low prices may be the new ticket.
TD Banks outright purchase of a teetering lender in the Southeasta crisis zone of the banking
crisisis the latest sign prices for troubled banks are rising.
Late last month, the FDIC seized three troubled banks in Puerto Rico and sold them off to stronger
banks. Bidding was so strong that the FDIC said the seizures cost $500 million less than its
forecasts. In mid-April, TD Bank itself outbid competitors for three failed Florida banks, and
agreed to soak up a larger share of the failed banks future loan losses than the FDIC initially
offered.
Return to Top
4. With mergers, Canadian bank quickly becoming a power in Florida
The Tampa Tribune
05/17/2010
MICHAEL SASSO
A Toronto-based banking giant has quickly become a power in Florida after buying three banks and
now eyeing Mercantile Bank.
On Monday, TD Bank Financial Group announced it plans to buy The South Financial Group, the parent
company of Mercantile Bank in Florida and Carolina First Bank, which has branches in the Carolinas.
If regulators approve the deal, TD Bank will pick up South Financials 176 branches, including 66
Mercantile Bank branches in Florida.
The Canadian company, which has its U.S. headquarters in Portland, Maine, has gone on a buying
spree lately in Florida.
Two months ago, TD Bank had just 35 branches in South Florida. However, last month it acquired the
failed Riverside National Bank of Florida in Fort Pierce and two smaller Florida community banks.
The FDIC facilitated that deal.
Adding up those three banks and the new Mercantile Bank branches, TD Bank could have around 180
branches in Florida by years end if regulators approve the deal, said Kevin Gillen, TD Banks
regional president in the South.
The acquisition also would give the company a foothold in the Tampa Bay area, where Mercantile had
at least 17 branches.
The South Financial Group had been plagued by troubled loans, and TD Bank poured over its books
extensively, Gillen said. Last year, Greenville, S.C.-based South Financial lost $676.3 million,
mostly because it had to reserve so much money for potential loan losses, according to Securities
and Exchange Commission filings.
With such deep financial problems, TD Bank is buying South Financial at a bargain. TD Bank will pay
South Financial shareholders 28 cents for each stock share, or exchange each share of South
Financial for 0.004 shares of TD common stock. Stock in TD Bank sells for about $70 per share.
All told, payments to South Financial stockholders in cash or TD stock will come to $61 million. TD
bank will also pay $130.6 million to pay off the U.S. Treasury Department, which holds $347 million
of preferred stock in South Financial.
Longtime Florida banking experts say more bank buyouts are on the way.
Roy McCraw, a former Tampa Bay regional chairman of Wachovia Bank, said many community banks are
suffering from troubled commercial real estate loans and are seeking new capital. Where they once
commanded high prices, many small community banks today are selling for less than their book value,
McCraw said.
Benjamin Bishop, chairman of Allen C. Ewing & Co., an investment banking firm that specializes in
community banks, said he expects other big Canadian banks to look south for buyout targets. These
could include the Canadian Imperial Bank of Commerce and Scotiabank, Bishop said.
Canadian banks havent suffered the deep losses from subprime loans that U.S. banks have, Bishop
said.
According to a news release, TD Bank Financial Group had $567 billion in assets worldwide as of
Jan. 31. South Financial had about $12.4 billion in assets as of March 31.
Return to Top
5. TD deal further bolsters Florida presence
Philadelphia Business Journal
05/18/2010
JEFF BLUMENTHAL
Just last month, TD Bank went from about 30 Florida branches to 100 with the addition of three
failed banks it acquired from federal regulators. Now with Mondays addition of struggling South
Financial Group, TD adds almost 70 more Florida branches and enters another key market in the
Sunshine State, Tampa.
South Financial operates as Carolina First Bank in the Carolinas and Mercantile Bank in Florida.
Mercantile has 70 branches with much of its Florida deposit strength in the Tampa-Clearwater-St.
Petersberg area (more than
$800 million of its $3 billion deposits). It also has branches spread
out through Central and Northeast Florida.
The acquisition would give TD Bank its first presence on Floridas west coast.
The bank would cover much of Florida, with the exception of the Panhandle, Southwest Florida and
the Florida Keys.
Following the deal, TD Bank would have 170 branches in Florida, the sixth-most in the state.
Combining TD Bank with the four banks it acquired in the past month, according to the June 30,
2009, FDIC numbers, would give it a little more than $7.1 billion in Florida deposits good enough
for 10th place among the top banks for deposits in Florida. It was 40th before the April
acquisitions.
Carolina First Bank also has 83 branches in South Carolina and 27 branches in North Carolina. So
not only does the deal enhance TDs growing Florida network, it helps to bridge a break in its
footprint between the Washington metro area and Florida, where the bank had no presence. In North
Carolina, it enters markets such as Asheville and Wilmington while in South Carolina, it gains
sites in Charleston, Columbia, Lexington, Myrtle Beach and Aiken.
TDs predecessor, Commerce Bank, first entered Florida in 2005 when it acquired Palm Beach County
Bank. Since that time, the bank had grown organically to 35 branches with nine more in the planning
stages. The April acquisitions add a combined 69 branches to that total and potentially 40 more
branches in the pipeline. Those acquisitions also took the bank from its primary focus area in the
three counties that make up the Miami-Fort Lauderdale region to 16 of Floridas 69 counties,
extending up the eastern coast to Daytona Beach and the Jacksonville market and westward toward
Gainesville, Lakeland, Treasure Island and Orlando.
Return to Top
6. Deal to sell South Financial could face court challenge
Greenville News (SC)
05/18/2010
DAVID DYKES
The chairman of South Financial Groups board of directors told The Greenville News he wont be
surprised if the deal to sell the banking company to Toronto-based TD Bank Financial Group faces a
shareholder challenge in court.
There were signs that the merger, which needs approval of South Financial shareholders and various
regulators, faces opposition. The companys chairman, John C.B. Smith Jr., said he wouldnt be
surprised by a lawsuit challenging the agreement.
On Monday, Levi & Korsinsky, a New York law firm, said it is investigating South Financials board
for possible breaches of fiduciary duty and other potential violations of state law in connection
with the directors efforts to sell the company.
The law firm said in a statement the investigation concerns whether South Financials board failed
to adequately shop the company before entering the transaction and whether TD Bank is underpaying
for South Financial shares, thus unlawfully harming South Financial stockholders.
The law firm said that the offer price is below Fridays closing price and below the 99
cents-a-share price at which the companys stock traded as recently as April 15.
At least one analyst set a price target for South Financial stock at $3.50 a share and the median
target set by
analysts is 88 cents a share, the law firm said.
Smith told The News that the heavily discounted price was a concern to company directors who met
Sunday in Greenville with their financial and legal advisers and approved the merger.
Weve talked with a number of potential equity investors, capital investors and also a number of
strategic partners, he said. Of all that weve talked to, this was the best financially for the
stockholders by some margin.
None of us like where we are, said Smith, an attorney and owner of a Columbia real estate firm.
But, unfortunately, weve been subject to the severe downturn in the real estate market in Florida
and also western North Carolina and the coast of South Carolina.
Weve exhausted every other option and this was the best option left for us.
Were very pleased to reach an agreement to merge with TD, he said. We feel that this will be a
good thing for our stockholders and also a good thing for our customers and employees.
H. Lynn Harton, South Financials president and chief executive officer, said company officials met
with several firms, both equity providers and strategic partners. He declined to elaborate.
The sale of South Financial Group to the Canadian-based company alters the financial landscape in
Greenville, removing an important local headquarters and raising a level of apprehension about what
comes next.
The pressure on South Financial, the parent company of Carolina First Bank, had been steadily
growing and crested recently with a consent order with the federal government that required the
bank to raise more capital and unload troubled assets.
A top South Financial official told The Greenville News the company had exhausted its options and
struck the deal Sunday night with TD Bank Financial Group. South Financial had rolled up more than
$1.3 billion in losses since the beginning of 2008, when it installed new management.
TD, under the agreement, will acquire South Financial for $61 million in cash or TD common stock
a dramatic reduction from the companys market capitalization of $144.5 million and its share price
of 67 cents on Friday, the last day of trading before the agreement was announced.
As part of the deal, the federal government will sell to TD its $347 million of South Financial
preferred stock acquired under the U.S. Treasury Departments Capital Purchase Program. TD will pay
approximately $130.6 million for the taxpayer funds South Financial received as part of the bank
bailout plan. The government agreed to discharge all accrued but unpaid dividends on that stock, TD
officials said.
The next steps are critical for the community and for the companys more than 2,000 employees. The
chief executive of TD told The Newson Monday that its too early to discuss how many jobs could be
affected by the merger agreement.
Community leaders said there also are questions about what happens now with the sudden departure of
a headquarters bank that played a leading role in financing developments that have transformed
Greenvilles downtown.
Asked about the potential impact on local jobs, Bh arat Masrani, president and chief executive
officer of TD Bank, told The Newsin a telephone conference that the merger was early in the
process and it was too soon to discuss specific job details.
This announcement is all about growth, he said. We do not have a presence in South Carolina.
Its an important market for us.
His companys intent is to have a credible presence in the state, Masrani said. Company officials
were expected to be in Greenville today.
Shareholder value
TD Bank Financial said it signed a definitive agreement with South Financial for TD to acquire all
outstanding common shares of South Financial for approximately $61 million in cash or TD common
stock. Shareholders of South Financials common stock will have the right to elect to receive
either 28 cents in cash, or .004 shares of TD common stock, for each outstanding South Financial
share.
Once the transaction is completed, TD will acquire all of South Financial and its businesses and
obligations, including all deposits of Carolina First, which also operates as Mercantile Bank in
Florida.
Common shares of South Financial traded sharply lower Monday after the announcement and lost more
than half their value to close at 30 cents a share.
South Financial canceled its annual meeting, scheduled for today in downtown Greenville, after the
deal was announced.
Management progress
Jim Grantham, former chairman and president of First National Bank in Easley, whose bank was
acquired by Carolina First about 12 years ago, said, I had hopes, even though I knew it was
probably unlikely or unreasonable, that the bank could make it standing alone.
I guess at this point I figured most of the losses have been taken and that they might be able to
raise the necessary capital because it would be a relatively low-risk investment, said Grantham,
whose family owns more than 300,000 shares of South Financial stock.
Masrani, TDs chief executive, said the South Financial team made a lot of progress in improving
risk oversight and operations, making timely decisions and taking corrective action.
For TD, the agreement offers a platform for expanding in the Southeast and increasing its presence
in Florida. South Financial, as of March 31, had about $12.4 billion in assets and 176 branch
offices. About 44 percent of its customer deposits were in South Carolina, 45 percent in Florida
and 11 percent in North Carolina.
This transaction represents another key milestone as we continue to build out our U.S. franchise,
said Ed Clark, president and chief executive of TD Bank Financial.
South Financial began its operations in 1986 under the name Carolina First Corp. with the opening
of its banking subsidiary, Carolina First Bank, in Greenville. Its opening was undertaken, in part,
in response to opportunities resulting from the takeovers of several South Carolina-based banks by
larger Southeastern regional bank holding companies in the mid-1980s. TheToronto-Dominion Bank and
its subsidiaries collectively are known as TD Bank Financial Group. The companys businesses
include TD Waterhouse and an investment in the TD Ameritrade online broker. Last month, TD bought
three closed Florida financial institutions AmericanFirstBank, First Federal Bank of North
Florida and Riverside National Bank from the Federal Deposit Insurance Corp. TD previously
acquired Commerce Bancorp Inc. in the Mid-Atlantic States. TD Bank is one of the 15 largest
commercial banks in the United States with $152 billion in assets. Harton told The News he will join
TDBanks management under a three-year retention agreement, stay in Greenville and report to
Masrani.
Return to Top
7. TD Bank officials in love with Greenville
Greenville News (SC)
05/18/2010
BEN SZOBODY and JENNY MUNRO
TD Bank officials have been to town, and fallen in love with Greenville, especially the pro
cycling events, said Ben Haskew, president of the Greenville Chamber of Commerce.
Developer Bo Aughtry, whose sole lender for the just-completed Main@Broad project was South
Financials Carolina First Bank, said the exposure of Greenville to bank executives already
illustrates how exposing people to Greenville ends up generating more economic opportunity.
If you get somebody here, theyre going to love this market, he said.
Whether Greenville loses anything in terms of both lending for local development and high-profile
civic contributions depends on whether TDs local executives will be free to make their own
decisions, said Greenville Mayor Knox White, adding he believes that is likely to be the case.
Hes had contact with TD officials over the course of the past year, knew the group was interested
in Greenville and said the bank puts a high premium on community involvement.
We think this is obviously a positive, said Steve Dopp, Charleston-based developer of the Westin
Poinsett Hotel in downtown Greenville. This is a very strong, very respected bank in the United
States and Canada.
Given South Financials current situation, the best solution was an out-of-market bank taking
over, he said, adding he understands that most of the local management probably will be retained.
Any time you lose a headquarters, you lose a certain amount of wealth, Haskew said. Hopefully,
they will retain a headquarters function here.
He added South Financial obviously needed financial support and this could be good news overall.
But its too early to know exactly how the business community and Greenville as a whole will be
affected.
Were asking ourselves those questions, Haskew said.
Local business leaders who have played key roles in Greenvilles downtown renaissance said its
important to look to the future and not spend too much time lamenting the sale of a key financial
institution that has been at center stage in the regions growth.
Aughtry said while some downtown projects wouldnt have happened without the banks involvement,
deserving projects will still be able to find financing.
A bigger issue, he said, is the size of Carolina Firsts contribution to seemingly every major
community or charitable effort in Greenville.
That presence, Aughtry said, will be very hard to replace unless the bank holding companys new
owner adopts the same approach to the community.
Aughtry said the deal struck with TD Bank is a win compared to the other potential options for
Carolina First, in
part because TDs existing market doesnt duplicate any of the territory
Carolina First covers.
He also said that for TD to grow its market share, it will have an incentive to be a good corporate
citizen.
Former City Councilman Garry Coulter said while its better to maintain a corporate headquarters,
the nature of business is change, and given the possible outcomes for Carolina First, this was a
good one for the bank and for Greenville.
Haskew said sometimes its more difficult to gain support from organizations with out-of-town
headquarters.
Carolina First has been a major lender behind a range of key projects including RiverPlace on the
Reedy River and downtowns Poinsett Plaza and other developments.
It also has a 10-year, $3 million contract for the naming rights to the Carolina First Center,
formerly the Palmetto Expo Center. White and City Manager Jim Bourey said Carolina First Center is
likely to change names, but they expect TD to complete the contract and maintain other sponsorship
commitments.
And Carolina Firsts total sponsorship commitment alone is in the hundreds of thousands each year,
Bourey said, adding the Carolina First Reedy River Run to the list. Another signature event the
bank supports is the Carolina First Saturday Market, for which it pays $12,500.
The bank also has provided major start-up funding for the Carolina First Center for Excellence, a
major education program begun by the Greenville Chamber.
Carolina First gave birth to us, but they said from the beginning we needed to get other support,
said Michele Brinn, Chamber vice president of workforce development and education, of the creation
of the Center for Excellence. Through time, we have found other support, Haskew said.
Dopp said his Packwood Management firm and Carolina First have a very strong and important
relationship.
The bank provided 50 percent of the first-mortgage financing for the Westin Poinsett and was the
foundation for the remainder of the complicated deal for the hotels development, he said. Because
the Poinsett had been closed for some years, finding financing was difficult.
John Tully, president of Michelin Development Upstate, said his organization, which provides
low-cost lending for small businesses in the Upstate, is intimately involved with Carolina First.
The bank provides due diligence and other banking functions for Michelin Development Upstate.
Im not anticipating any chances from that perspective, he said, adding its too early to assess
the impact on Greenville and the Upstate of losing a financial headquarters.
Michelin North America also does business with Carolina First, said Lynn Mann, spokeswoman for the
Greenville-based company.
Its too early yet to know how the merger will impact Michelin, she said. But the company
appreciates the flexibility that comes with a bank that has a significant presence in Greenville.
Coulter, executive vice president of USA Risk Intermediaries LLC, said TD is heavily involved in
the captive insurance market where he works and describes a conservative and soundly managed bank
thats a giant in Canada and bigger than all but the Wall Street titans in the United State.
If anything, he sees the company adding support to its new market in South Carolina including the
unofficial kind.
Expect to see Canadians of means in town during the winter, wearing inappropriately light clothing,
Coulter said, predicting a seasonal migration that will stem from corporate knowledge about the
city.
This is already a trend. Coulters boss lives in Vermont, he said, but owns a townhouse in
Thornblade.
Return to Top
8. VIDEO CLIPS: Ed Clark, Colleen Johnston and Bernie Dorval interviews
To play clip in a separate window, click here.
Program: Trading Day
Station: Business News Network
TD Banks US Expansion: Canadas TD Bank continues to push to expand its presence in the United
States, with Ed Clark, TD Bank Financial Group CEO & president.
* * * * *
To play clip in a separate window, click here.
Program: Trading Day
Station: Business News Network
TD Bank Makes a Buy: The TD Bank Financial Group is continuing its expansion in the United States,
agreeing to acquire Greenville, South Carolina-based The South Financial Group. Co lleen Johnston,
CFO, Toronto-Dominion Bank, explains why the bank is buying the troubled lender and how the deal
fits into TDs growth strategy in the U.S.
* * * * *
To play clip in a separate window, click here.
Program: En Affaires
Station: Canal Argent
Bernie Dorval interviewed.
Return to Top
9. Canadian business brands weathered recession well
National Post
05/18/2010
HOLLIE SHAW
News and multimedia giant Thomson Reuters has shot to the pinnacle of a top 25 Canadian brands
ranking by Interbrand Canada.
Thomson Corp.s 2008 acquisition of Reuters showed how ably a Canadian business can take centre
stage globally, said Bev Tudhope, chief executive of Interbrand Canada, which assigned the brand a
value $9.4 billion in
its Best Canadian Brands 2010 survey.
The one thing we love about that merger was that it was so bold, said Tudhope. Thomson Reuters
has (become) a global powerhouse. They are more of a business-to-business brand than a
business-to-consumer brand, but they have definitely gained in recognition and profile since the
merger happened.
They regularly run full-page ads in the business press and they did a massive rebranding campaign.
We are proud to call them a Canadian brand.
Interbrand, a division of Omnicom Group Inc., the worlds largest advertising conglomerate,
publishes an annual list of global brand rankings and does one specifically for Canada every two
years.
The agency arrives at a financial value for a brand based on three criteria: Economic earnings
attributable to the brand (a subtraction of operating costs from a companys revenues and
earnings); the role the brand plays in Canadian business, and; a score of the brands strength
projected into the future based on its stability, longevity, consumer loyalty, buzz and consistency
of consumer experience.
Canadian brands held up incredibly well through the recession, Tudhope noted, with the top 25 of
2010 rising by a total value of $14.9 billion, or 35 per cent, over Interbrands last study in
2008. A noted strength among many in the top 25 is how well they are diversifying globally, which
raises the profile of Canadian enterprises and cements our global reputation, Tudhope said.
Financial institutions also ranked prominently on the list, with Toronto-Dominion Bank leapfrogging
over Royal Bank of Canada to take second place this year compared with 2008.
The banks have always been in the top five, and our banking sector has performed better than any
other in the world in the last 18 months, Tudhope said. TD, with a brand value of $6.7 billion,
moved ahead of RBC on the strength of it performance and acquisitions. It edged ahead of RBC this
year primarily because RBCs operations in U.S. are a bit of a lag on performance.
Coffee and baked goods chain Tim Hortons moved into to sixth place from 10th with a brand value of
$2.6 billion, also on the strength of its U.S. expansion, Tudhope said.
He also cited the global penetration of top-25 newcomer La Senza, the Montreal-based lingerie brand
bought by U.S.-based Limited Brands in 2007.
La Senza is operating in almost 50 countries outside of Canada. Many people in Canada do not know
how successful they have been around the world.
- - -
Canadas Best Brands
1. Thomson Reuters
2. TD
3. RBC
4. BlackBerry
5. Shoppers Drug Mart
6. Tim Hortons
7. Bell
8. Rogers
9. Scotiabank
10. BMO
11. Canadian Tire
12. Manulife
13. Bombardier
14. CIBC
15. Telus
16. Sun Life
17. Lululemon
18. Molson
19. Suncor/Petro-Canada
20. Rona
21. Shaw
22. Investors Group
23. Labatt
24. Imax
25. La Senza
Source: Interbrand Canada
Return to Top
10. Harper sends G20 a warning on debt; Will urge fiscal discipline at meet
National Post
05/18/2010
DAVID AKIN
Pg. A4
Prime Minister Stephen Harper, worried that rising debt and deficits of some of the worlds largest
economies will derail the global economic recovery, said Monday that he will push G20 leaders next
month to commit themselves to some benchmarks on the fiscal health of their national governments.
We now need to reassure markets not just that weve been prepared to intervene when we had to, but
that governments can run responsible and sustainable balances over the long term, Harper said.
The levels of deficit and debt in many countries are reaching levels that markets judge to be
unsustainable.
Craig Alexander, chief economist at TD Bank, said he agreed with Harpers push for G20 governments
to confront issues around their long-term fiscal sustainability.
It is very clear that across the industrialized world, there is a significant need to put more
responsible fiscal policies in place, Alexander said.
Harper is seen to have more influence in this discussion than Canada normally has at international
forums because of its relatively healthy fiscal position and its stable financial system. Canadas
banks were the only ones in major industrialized countries that did not require a government
bailout at the beginning of the recession. Moreover, Canadas debt and deficits relative to the
size of its economy are the lowest in the G8 and among the lowest in the G20.
In short, because Canadas fiscal and regulatory house is in order and because it survived the
recession better than most, Harper and his cabinet ministers believe they have the moral authority
to play a leadership role in G20s economic discussions.
On Monday, Harper sent a letter to each leader who will attend the G20 summit in Toronto at the end
of June, arguing that the Framework for Strong, Sustainable and Balanced Growth the key
document that came out of
earlier G20 summits in Washington and Pittsburgh must now be re-written
to deal with debt levels that are threatening to swamp Europe.
We must continue to fulfil our international obligation to fully implement our stimulus plans to
avoid a slide back into financial or economic crisis, Harper wrote. However, as the recovery
becomes entrenched and our stimulus plans expire, we cannot afford to rest on our laurels. We must
quickly turn our attention to the next major issue facing our countries and the G20 as a whole,
that is, the issue of restoring our public finances, or, as many economists put it, implementing
fiscal consolidation.
Alexander said Canada is one of a handful of G20 countries that have a credible plan to emerge from
deficits in five to seven years.
Markets now are concerned about the fiscal probity of countries like Greece, Portugal, Ireland and
Spain, but there are also concerns that giants like the U.S. and Japan must also provide credible
assessments of their return to sustainable government fiscal policies.
In the letter, Harper warns G20 leaders that it is vital that governments and not the worlds
bankers set the terms and benchmarks for debt and deficit levels.
We can confront our fiscal challenge with clear and realistic plans for fiscal consolidation, or
we can wait for markets to dictate the terms for us, Harper wrote.
He wants each country to arrive at Torontos summit with clear plans to return to sustainable
levels of borrowing.
It is preferable for governments to set out the terms and scope of these consolidation plans
consistent with each countrys individual needs and circumstances. But to meet this challenge, we
must deliver firm, credible plans that will put our countries on a path to fiscal sustainability.
The excerpts of the letter, released by the PMO, indicate that he also wrote: Care must be taken
to design consolidation plans so they do not halt recovery but sustain it, while looking to
countries with high savings to provide greater support for demand.
The prime ministers office would not release the full text of the letter, nor would PMO officials
identify the countries Harper is singling out when he speaks about those with high savings.
TDs Alexander suggested it would almost certainly be interpreted to mean China and Germany.
The argument would be if (China and Germany) didnt save quite as much and if they consumed more
goods and services from other countries, they could actually help to support growth while the
fiscal rebalancing is taking place in other regions, Alexander said.
Harper also said the decision by Canada and other G20 leaders to run up huge government deficits
both this year and last were the right decision.
That has been a very necessary part of the recovery, he said.
Return to Top
11. Tories launch global fight against bank tax
The Globe and Mail
05/18/2010
GRAEME SMITH and KEVIN CARMICHAEL
Pg. A1
Canada is taking its campaign against a global bank levy on the road, part of an aggressive shift
in tactics by the Harper government to kill an initiative that risks becoming a distraction from
the Prime Ministers agenda at the G20 summit.
Finance Minister Jim Flaherty, who blocked a push by the U.S. and the European Union to win G20
support of a bank levy last month at meetings in Washington, was on the offensive in New Delhi
Monday, trying to win support for Canadas counterproposal to the bank tax, an untested plan that
would require financial institutions to sell debt that would convert to easily accessible reserves
when funds run low.
We have to keep our eye on the ball, said Mr. Flaherty, who rallied support for his stand among
G20 finance ministers from emerging markets by characterizing the bank levy as unfair punishment of
countries who had no role in causing the financial crisis. The banks in India performed well, and
so did the financial institutions in Canada.
Mr. Flahertys meetings with his Indian counterparts were only the beginning. Tuesday, five cabinet
ministers will make the case for stricter financial regulation and against the bank levy at
speeches or press conferences in four cities, including Mr. Flaherty in Mumbai and Trade Minister
Peter Van Loan in Washington.
The co-ordinated public relations assault mirrors a tactic the Prime Minister Stephen Harper uses
to effect at home, deploying cabinet ministers to several locations at once, creating several
mini-events that strengthen the chances of the governments message getting out.
Joining Mr. Flaherty and Mr. Van Loan in the media blitz is Treasury Board President Stockwell Day,
scheduled to speak in Shanghai, where he will have a chance to make an impression on the one
country that rivals the U.S. and the European Union in economic might.
In Ottawa, Industry Minister Tony Clement and Foreign Affairs Minister Lawrence Canon were
scheduled to hold a press conference early Tuesday afternoon to make the governments case on
financial regulation to the home crowd.
The Harper governments international lobbying effort represents an escalation in tactics, which
until now consisted of speeches, media interviews and the occasional op-ed piece in the business
press.
It also shows that Ottawa believes the idea of a global tax still has life, and that the Canadian
argument that such a levy unfairly punishes the innocent might not be enough to carry the day when
some of the worlds most powerful economies are the opponents.
The debate over the bank tax is rooted in the G20 pledge to ensure taxpayers dont pay for future
bailouts of financial institutions. While everyone agrees on that issue, the debate is about how to
achieve that goal. Most European countries, with the backing of the International Monetary Fund,
say this is would best be done by raising money from the banks directly. But to work, a tax would
have to be applied broadly. Otherwise, financial institutions could try to avoid the fees by
fleeing to non-tax jurisdictions.
Canadas counterproposal is to make banks raise embedded contingent capital, which Canadian
officials argue would ensure taxpayers avoid paying for future bailouts by shifting the burden to
shareholders, who would see their existing stake diluted when the contingent bonds were converted
to equity.
Mr. Flaherty didnt say how Canadas contingent capital idea was received during his meetings
with Indias finance minister, Pranab Mukherjee, and the countrys G20 sherpa Montek Singh
Ahluwalia. In academic circles,
the concept is coming under greater scrutiny, and some are
skeptical.
Among the unknowns is how markets would react when a bank triggered its contingent capital. Rather
than strengthen the bank, investors could see the move as a sign of weakness, which could lead to
mass selling of the firms shares or even a run on the bank itself by nervous deposit holders.
But Canadas agenda is bigger than the fighting the bank tax.
As the euro fell to its lowest level in four years amid worries Europes debt crisis will impede
economic growth, Mr. Flaherty talked to Indian officials about the need for fiscal constraint in
the G20, echoing the message of a letter Mr. Harper sent to the other 19 leaders in the group on
Monday.
In Toronto, leaders will attempt to co-ordinate their domestic economic policies to foster
sustainable global economic growth, which includes ensuring the expansion in India and other
emerging markets makes up for what will be lost in the U.S. and Europe, which must save to
constrain massive private and public debts.
Building such a framework is all the more important given what has evolved in Europe of late,
including fiscal consolidation and the clear need for fiscal consolidation to proceed and proceed
now, Mr. Flaherty said.
When asked if Europes woes could spread, Mr. Flaherty said, Not yet, not that I have seen. But
he added: We have to obviously be cautious and vigilant.
Return to Top
12. Editorial: Banking on Mr. Flaherty
The Globe and Mail
05/18/2010
Jim Flaherty, the federal Minister of Finance, is right to be engaging in international diplomacy,
in order to resist the proposal for a global bank tax.
The United States and Europe, where governments had to spend large amounts of money rescuing a
number of banks in the financial crisis of 2008-2009, are favourable to this idea. But Canadas
banks should not suffer for sins they did not commit and they should not have to pay taxes that
would amount to compulsory insurance premiums for the risk of losses they are most unlikely to
incur.
Mr. Flaherty and his colleagues are wisely looking elsewhere for allies in the G20, in preparation
for the June summit. Asia did not have to bail out banks, so Mr. Flaherty is in India, and
Stockwell Day, the President of the Treasury Board, is in China for the Shanghai worlds fair.
Canada is not simply immune to bank failure. It happened here in the 1920s, and again in 1985, with
the Northland Bank and the Canadian Commercial Bank not to mention the failures of several near
banks such as trust companies. Julie Dickson, the head of the Office of the Superintendent of
Financial Institutions, pointed out that history in a speech last month, and warned, Banks should
not assume that G20 countries will simply adopt Canadian rules and call it a day.
Rather, she is advocating embedded contingent capital, and Mr. Flaherty has taken this message to
India. Instead of a systemic-risk fund based on the proceeds of a global bank tax, such as many
others are endorsing a kind of insurance policy that could increase the all-too-comforting
expectation of bailout Ms. Dickson and Mr. Flaherty propose a reform that builds in market
discipline. Banks would issue debt instruments that would be converted into shares in the event of
a crisis, thus maintaining capital, while diluting the interests of the existing shareholders.
The Greek fiscal crisis has awakened justifiable fears of sovereign defaults, and banks as
creditors of some shaky sovereign states are charging each other higher interest rates in
consequence. This renewed consciousness of bank instability should not result in the imposition of
new tax burdens, but in the prudent, market-oriented reforms that Jim Flaherty and Julie Dickson
advocate.
Return to Top
13. Promise exceeds reality of financial reform bill
The Globe and Mail
05/18/2010
BARRIE McKENNA
Pg. B11
Capitol Hill insiders are betting this is the week the U.S. Senate finally okays a monster
financial reform overhaul bill.
It would mark the last serious hurdle for the legislation, which seeks to redraw the rules of bank
regulation in the United States.
Another event this week is likely to pass with considerably less fanfare.
On Thursday, U.S. Federal Deposit Insurance Corp. chairwoman Sheila Bair provides her quarterly
checkup of the banking industry, detailing the financial health of the industry and updating its
list of problem institutions.
This picture is not likely to be pretty. The last time she reported, U.S. authorities had just
finished seizing the 140th failed bank of 2008 and the number of institutions in trouble had shot
up to 702, the most since the savings-and-loan crisis of the early 1990s.
This weeks report is likely to be much worse as the problems in the banking industry filter down
to ever-smaller institutions, which tend to be more heavily exposed to commercial real estate and
construction lending.
Through last Friday, 72 banks had failed in the United States this year. Experts said the tally for
the year could top 200.
In a recent interview, Ms. Bair said that what troubles her in the short term is the daily strain
of shutting down and auctioning off failed banks. But what keeps her up at night is making sure
the party doesnt start again, she told her home-state newspaper, the Kansas City Star.
And that, she said, is why we need financial regulatory reform.
But as the Senate completes its work on the financial reform package, its not clear the
legislation would prevent another party, as Ms. Bair puts it.
The rhetoric of the bills backers sounds good. They argue the legislation would rein in Wall
Street, put an end to financial institutions that are too big to fail, protect consumers and
prevent the next crisis.
Reality is unlikely to be so clear-cut. The basic structure of the U.S. banking industry and its
supervisors remains largely intact. Regulators will still face a nightmarish array of institutions
to watch over. There will still be roughly 8,000 banks in the United States from systemically
important mega-banks such as Bank of America and
Citibank, to tiny mom-and-pop operations on Main
Street.
Nothing in the bill specifically limits the size of the big banks, nor the sheer number of smaller
lenders for that matter.
Instead, the legislation promises a better early-warning system and an orderly funeral process
for winding down large banks that threaten the financial system, without taxpayer-financed
bailouts.
But there will still be institutions whose activities are too woven into the financial system to
simply let fail. And its no secret who they are, giving them an unfair advantage in raising
capital.
To a degree, the legislation would rein in Wall Street. There would be more transparency of
financial derivatives. And under the so-called Volcker rule, banks would be barred from trading on
their own accounts or investing in hedge funds and private equity firms.
But no one is predicting the demise of Goldman Sachs and the other big investment banks, who helped
engineer the leverage machine that brought the economy to the brink.
And what would protect savers and borrowers? Yes, theres a new consumer regulator. But nothing in
the legislation would prevent the kind of Wild West mortgage lending that went on during the
housing boom.
Another frequently cited culprit of the financial crisis is the credit-rating industry. Again, the
legislation doesnt address the fundamental conflict of interest that exists between investment
dealers, who pay raters to determine whether their securities are credit-worthy.
The bill also tackles the perverse incentives on Wall Street, where compensation too often rewards
short-term gains over long-term financial health.
Here again, the promise exceeds the reality. The centrepiece of the legislations section on
executive compensation gives shareholders the right to demand non-binding votes on pay.
Indeed, the banking industry may look a lot like it does now when U.S. President Barack Obama signs
the legislation.
So dont be surprised if you get an invitation to the next party.
Return to Top
14. Senators Seek Curbs On Foreign Bailouts
The Wall Street Journal
05/18/2010
GREG HITT and VICTORIA McGRANE
Pg. A5
The Senate approved Monday a measure that could make it harder to deploy U.S. funds in rescuing
foreign governments, signaling Congresss unease with the sort of global economic aid recently
given to Greece.
The measure, adopted by a 94-0 vote as an amendment to the financial regulatory overhaul bill the
Senate is considering, would require the Obama administration to certify that any future loans made
by the International Monetary Fund would be fully repaid. Absent such as certification, U.S.
representatives to the IMF would be required to oppose the lending. The U.S. is a major funder of
the IMF, which provided loans to Greece as part of a larger support package.
American taxpayers should not be involved in bailing out foreign governments, said Sen. John
Cornyn (R., Texas), chief sponsor of the amendment. Greece is not by any stretch of the
imagination too big to fail.
The thrust of the amendment is the correct one, added Senate Banking Chairman Chris Dodd (D.,
Conn.). This is a good amendment deserving of our support.
In a recent interview with Bloomberg TV, Treasury Secretary Timothy Geithner voiced concern about
the proposal. He said the U.S. has never lost a penny while supporting the IMF. We have a big
stake in helping Europe manage through these things and were going to do it in a way that is
sensible for the American economy and the American taxpayer, he said.
The bipartisan support for the amendment underscored the desire of lawmakers to avoid any measure
that could be seen as a taxpayer-funded bailout.
But in practice, it is not clear how significant Mr. Cornyns proposal would be. Country loans of
the sort extended to Greece require the approval of a simple majority of the IMF board. That means
no single IMF stakeholder even the U.S. can block them. Moreover, IMF loans rarely proceed
without already being assured of wide support.
The Senate also passed an amendment that removed restrictions in the original overhaul bill that
made it tougher for so-called angel investors to finance start-up businesses. The bill would have
increased the regulatory requirements for this class of investor, and would have included an
extended review by the Securities and Exchange Commission. The amendment, which passed by voice
vote, removed these requirements.
In other developments Monday, Senate Democratic Leader Harry Reid raised the pressure on fellow
senators to close debate on the broader overhaul bill. Mr. Reid filed a petition Monday to shut off
debate, setting the stage for a vote Wednesday. If debate is closed, as expected, a vote on the
Senate bill itself would soon take place. If it passes, it will still need to be reconciled with a
regulatory overhaul bill the House of Representatives has already passed.
Mr. Reid wants to clear the way for action before Memorial Day on a handful of other high-priority
measures in Congress, including a bill to continue funding the wars in Iraq and Afghanistan.
This cannot be delayed any longer, the Nevada Democrat said. The end must come.
The regulatory overhaul bill aims to increase consumer protections and limit risk-taking in the
banking system, among other things. It is meant to address some of the perceived weaknesses in
current regulation that may have contributed to the recent crisis in the financial sector.
Dozens of amendments are still pending.
One proposal from Sens. Jeff Merkley (D., Ore.) and Carl Levin (D., Mich.) would restrict bank
trading activities, prohibiting proprietary trading at banks that have access to federal deposit
insurance.
Another proposal, promoted by Sens. Maria Cantwell (D., Wash.) and John McCain (R., Ariz.), would
reinstate Depression-era rules that barred commercial banks from affiliating with investment banks.
Return to Top
15. This new credit crunch seems so déjà vu
The Globe and Mail
05/18/2010
BOYD ERMAN
Coming soon: Credit Crunch Part II.
Early looks at the plot suggest it will be much the same as the first time around, freshened up
with the usual sequel tropes of different exotic locales and a few new characters.
There will be tales of bad loans to dodgy borrowers in sunny climes leading to a loss of faith in
the financial system, bank bailouts, dubious derivatives, and unexpected economic ripple effects
that sideswipe everyone from Canadian oil producers to Chinese toy makers.
Greek and Portuguese politicians take leading roles as the villains, instead of California and
Arizona home buyers. The patsies, previously portrayed by Lehman Brothers and Citigroup, are now
German and French banks. Brussels and Frankfurt sub in for Washington, where politicians sweat
bailout after bailout as they race to save the world.
It starts a bit slow, but by the end it could be terrifying. That is, unless policy makers can find
a way to cancel the sequel by stopping the steady ossification of European credit markets.
There is a bit of a déjà vu feeling, says Roger Lowenstein, author of The End of Wall Street,
which chronicles in impressive and depressing detail the madness that gripped U.S. banks and led
many to ruin in the past decade.
More than a bit, actually. Reading The End of Wall Street, which came out last month, is like
entering some sort of portal in time.
One moment you are engrossed in the part about the Dow Jones industrial average taking a huge
tumble as markets figure out just how bad the Lehman situation is; the next minute someone wanders
by and says Hey, the Dows down 400 points. The only difference is this time it is sovereign debt
not mortgages that trigger the anxiety.
There are the debtors blaming speculators rather than mismanagement for their own misery. There
is the seizing up of the financial system with indicators such as the TED spread and Libor
increasingly showing fears that banks are going to run into trouble.
Credit default swaps that provide insurance against European banks failing are becoming
increasingly expensive. Commercial paper markets are showing stress, threatening again to cut off
financing for companies in all types of business.
Traders in Europe clearly remember that theres never just one bug in the salad, Mr. Lowenstein
says. Greece may be just a harbinger of more problems to come, as the troubles at Bear Stearns
Holdings Inc. were.
Markets are saying if we couldnt trust Citi and Merrill Lynch why should we trust Portugal?
Yet again, it can all be traced back to bad debt at the banks. U.S. banks lent too much to barely
solvent homeowners who fibbed about their earnings and ability to repay. Europes banks lent too
much to barely solvent governments that lied about their finances. Both times, regulators who were
supposed to be watching were asleep.
Once again, the concern is that financial institutions will end up with big losses that will force
them to cut back on lending.
Traders in Europe clearly remember that theres never just one bug in the salad.
Roger Lowenstein, author of The End of Wall Street
Thats when financial sector problems become wider economic problems. Thats when you get these
15-car pileups on the highway, Mr. Lowenstein says.
Just as the U.S. mortgage mess found its way across the seas, Europes problems are not confined to
the continent.
Chinas stock market is plunging and economists warn that trade may shut down if European banks
start to shun the letters of credit upon which Chinese exporters depend to make sales. Oil and
other commodities are being slammed on fears of a slowing China. Canadas resource sector is
collateral damage.
Yet as bad as it could be, theres a sense that in the broader world, many remain unaware.
Thats also a familiar plot feature. There were six months between the near-failure and fire sale
of Bear Stearns in March, 2008, and the rapid series of crises that marked the worst of the
financial collapse in September of that year. All the while, Main Street had little idea what was
coming down the pipe a monster that we now know as the Great Recession.
Can regulators avoid having bad loans to governments trigger the double-dip recession that until
recently seemed to be a forgotten risk?
As Mr. Lowenstein points out, once the bad loans are made, there arent many options. In 2008,
once the loans were on the books Im not sure there was a soft landing possible.
If thats true, Credit Crunch II could be pretty tough to watch.
Return to Top
16. Banking: Ready to rumble
Canadian Business
05/18/2010
THOMAS WATSON
At least a few eyebrows raised in March when Canaccord Financial CEO Paul Reynolds struck a
$286-million deal to acquire Genuity Capital Markets, David Kassies closely held investment bank.
After all, smooth honeymoons are not the norm for financial marriages, which typically involve egos
as large as the related transaction prices.
According to analysts, there is a lot to like about this cash-and-stock deal, but there is also
execution risk. Canaccords acquisition of Bostons Adam Harkness didnt get off to a positive
start, says one industry watcher. And a lot of industry people think there will be plenty of
discord at the morning meetings with Genuity involved. The Genuity guys have a reputation for being
very aggressive, more so than on the Canaccord side. Canaccord has also focused on growth stories.
Thats their story. And Genuity has a different base of larger-cap clients. That means little
overlap, which is good for any merger. But it also means different cultures. The cynical view is
that Genuity sold out to a lower-quality competitor instead of doing an IPO. So some people see
Kassie and crew looking for an out.
Another Bay Street insider says Reynoldss decision to invite Kassies stable of cowboys into
Canaccords public corral could result in a reverse takeover.
Reputational risk is also a factor. Under Reynoldss steady stewardship, Canaccord which posted
$478 million in revenue for its fiscal 2009 period is nothing like what insiders fondly call the
Vancouver bucket shop of yesteryear. But it took a serious PR hit from the asset-backed commercial
paper fiasco. And Genuity was born out of a string of controversial deals and blunders at the
Canadian Imperial Bank of Commerce, including one that resulted in a US$2.4-billion payout to Enron
investors.
Kassie, a former head of CIBC World Markets who was expected to eventually take CIBCs throne, was
tossed overboard in 2004. Shortly after, Genuity was conceived around his picnic table, and it
became a magnet for deal-making talent. After a string of embarrassing defections, CIBC sued,
claiming Genuity was poaching. Kassie fired back with a wrongful-dismissal action. According to
Street humour, the ongoing litigation will last as long as the Peloponnesian War.
Critics predicted Genuity would fail, which is why the Canaccord acquisition is seen by some as
vindication for Kassies career. But the man doesnt need to prove himself. He is widely respected,
even by former CIBC executives who did not follow him to Genuity. I have enormous respect for
David Kassie, says Don Lindsay, CEO of Teck Cominco and former president of CIBC World
Markets, adding it wouldnt be appropriate to comment more until the CIBC lawsuit is settled.
Furthermore, after Kassie left CIBC, the banks reputational hiccups didnt stop, while Genuity
quickly attracted big-name clients. David was on my board, and I know him well as a director,
says Michael MacMillan, former head of Alliance Atlantis. But I also know him as an investment
banker who really understood business and economics. Ive used various firms over the years, and
all have had pros and cons. But Alliance had terrific experiences with Genuity. The fact that it
was a new firm didnt bother us. We knew David and his track record. Bobs your uncle. There is not
much more to say.
Since its inception, Kassies firm which generated about $100 million in revenue in its last
fiscal year has grown itself into a top-notch M&A shop. And that could be exactly what Reynolds
needs to achieve what he calls Canaccords global ambitions.
The day before shareholders voted 99.8% in favour of the merger, Canadian Business sat down for an
exclusive interview with the power brokers behind Bay Streets most recent high-profile partnership
to discuss the deal, investment banking, the economy and life on the Street.
CB: How did this deal come to pass?
Paul Reynolds: Canaccord is always looking for ways to grow its business. We look for opportunities
in the U.S. We look for them in the U.K. And we look in Canada. David and I had a merger talk about
21/2 years ago, but the financial crisis hit, and a deal didnt work for either of us at that time.
We got together for another talk late last year. It was prompted by Canaccord. We saw an
opportunity to buy an M&A business at the right time, the low end of the cycle.
CB What was the driving factor?
David Kassie: When Paul called, Genuity was coming up on its fifth anniversary. Our partners
committee had already had a strategic offsite to discuss the next five years. In addition to
thinking about going public, we were thinking about exploring strategic options, but with nothing
on the radar. Nobody was looking to cash in and exit the business. After talking to Canaccord, we
benchmarked the merger opportunity with an IPO and saw a larger and better platform to grow more
rapidly. The other thing was Canaccords indigenous U.K. businesses, its indigenous U.S. business
and its retail business, none of which Genuity had. We felt our capabilities and senior management
skills could help add value to these businesses. Frankly, I dont think they are represented in the
Canaccord share price, but they have been improved quite a bit by Canaccord, and they look to be
at, or close to, the inflection point, when they could add serious value. So we felt that this was
a really good opportunity.
PR: For us, the main genesis, really, is that Genuity is great at things in which Canaccord lacks a
lot of expertise
and vice versa. Canaccord is a prolific underwriter, and most of our business,
over 70%, comes out of that revenue engine. At Genuity, over 70% of what they do comes out of M&A
and advisory skill sets. Putting our firms together creates one of the top, if not the top,
investment banks in the country. We are now clearly the No. 1 independent in Canada. No. 1 in M&A,
restructuring and equity underwriting. This merger puts us in direct competition with the major
banks.
CB: You both have run organizations that have been caught up, rightly or wrongly, in
reputation-threatening media storms. Did that create any merger concerns?
PR: I dont see any negatives in Davids past. He has an impeccable reputation and is one of the
industrys most trustworthy and bankable names. As for Canaccord and ABCP, it happened the week I
took over as CEO. I came from the capital markets business and didnt know much about commercial
paper. I had to come up to speed. Clients that held ABCP walked out in a good position. We put them
first. Commercial paper cost our internal and external shareholders a lot of money. But we did the
right thing.
CB: Is a chairman role really meaty enough for David Kassie?
DK: I wont just be chairing the board. The title is group chairman, and it is a full-time
executive role. Ill be working with Paul and the rest of team on strategy and clients and
generating revenue.
PR: The big advantage of independent firms is the flat structure. We operate like a partnership.
David will be in the office every day and we expect him to be a big producer.
CB: Is there a threat that some top Genuity people will bide time until they can cash out?
PR: Their stock vests over a five-year period, and the senior guys are tied up for about eight
years, so theyre at Canaccord for a long time. David and his partners also didnt get what they
thought Genuity was worth, or what our independent advisers said theyd get in an IPO. They
took a discount because they are entrepreneurial. They want to take Canaccord shares to a much
higher place.
DK: With approximately 50 partners, the equity in Genuity was pretty broadly held. So for the most
part, I dont think anybody has realized career-ending ambitions. That said, I have a sense of what
motivates my partners. And they are not working just for money. Thats clearly part of it. But they
enjoy what they do. They like working together. They like serving clients. They like building a
business and competing. Thats why they do what they do. So I think people at the combined firm
will be pretty motivated for a long time. Im motivated and energized myself.
CB: No two firms are a perfect match. What are the expected challenges?
PR: At Canaccord, weve always said any merger would have to be a strong strategic fit, a strong
cultural fit and accretive to earnings right out of the gate. This deal is all three. Both firms
are producer-driven, so we dont have huge layers of management. Everybody at both firms is
involved in all aspects of the business, so we are a good cultural fit. Its been tough departing
with some good partners, who have been replaced by Genuity people who fit better going forward. But
the two businesses are so different that redundancies are minimal. With this deal, the big
synergies are not in cost savings, which are over $9 million. This is about revenue gained from
combining an equity underwriting and distribution firm with an M&A advisory firm.
DK: On the surface, you might expect cultural challenges integrating an M&A culture with an
underwriting culture. But we see an attractive and very complementary fit. Most of Genuitys
partners worked on larger platforms prior to joining the firm. Theyre used to having prolific
underwriting prowess and broader distribution capabilities. So were delighted to have more arrows
in the quiver.
CB: So no cultural differences? Not even Ki restaurant v. Bymark?
PR: Actually, our favourite restaurants do match. Canaccord and Genuity are a very similar deal.
And weve been very good at integrating businesses. We have domestic operations in Canada, the U.S.
and the U.K. And we make them work together very well. I dont think putting together like-minded
teams in Canada will be as difficult as making that broader group work well together.
CB: Other banking acquisitions have become reverse takeovers. Is that a concern?
PR: I dont have any concerns with this transaction. There are an equal number of senior people
from each firm in senior Canadian roles. My CEO role doesnt change. Obviously, I am happy about
that. Mark Maybank, our chief operating officer, stays in his role. Brad Kotush, our chief
financial officer, stays in his role. But the key is culture. Genuity and Canaccord are both
partnership cultures. I dont see a reverse takeover happening. I see a new
group of like-minded
partners. And they have the same goals as I have, which is to improve the efficiencies and
profitability of Canaccord and take the stock to much higher multiples for internal and external
shareholders.
DK: Investment banks are a people business. And it is very rare for a firm to have too much talent.
The shortcoming is usually that you dont have enough. So should too much talent be a problem, it
would be an extraordinarily high-class problem and one that usually doesnt occur.
CB: Now that the financial crisis appears to have passed, will Corporate Canada be more or less
likely to turn to an independent dealer for investment advice?
PR: I think we are very well positioned. Some of the larger banks put a lot of selling pressure on
their clients during the downturn, and there will be some backlash against them as things recover
and debt becomes more available.
DK: My experience is clients makes decisions based on whats required. And the winners are usually
the ones with the best ideas, execution, products and advice.
CB: With government and consumer balance sheets being what they are, how do you see the Canadian
and global economies performing over the near term as interest rates rise and government stimulus
stops?
PR: My view is that rates are going to remain pretty unchanged for the balance of this year. There
are very conflicting views, but thats my personal one. I think rates will stay low longer than
people think and that the economy will be able to absorb the small rate hikes I see over the next
18 months.
DK: The local economy has been doing relatively well compared to the U.S. And I think that will
continue to be the case. It is one of the few times in my 30-year career that Canada is definitely
in vogue internationally. We should have a reasonably good capital market, certainly relative to
other markets.
CB: Where will the big-money deals come from in the near term?
PR: A vast array of sectors and industries. I think mining might cool off a bit over the next six
to 12 months. Related commodity prices might have run a bit hard. But I am very bullish on energy
and business in the U.S., especially in life sciences and technology.
CB: What are the hidden, or lesser known, threats to the recovery?
PR: For the financial industry, the biggest threat is over-regulation. There are going to be a lot
of regulatory changes, although probably more so in the U.S. and U.K. than Canada. But that could
create an opportunity for us. Some major institutions may have to divest assets, and Canaccord with
Genuity is a larger more profitable firm that could make acquisitions to grow our businesses. It
may not happen. But there could be some great opportunities.
CB: What does it take to succeed as an investment banker today?
DK: With technological innovation, day-to-day details have changed over the years. But fundamentals
to success have not. Success is about being creative, putting clients first, problem-solving and
having value-added ideas.
PR: I started as a trader, then I was a private client broker, then I was in institutional sales,
then investment banking, then a chief operating officer, and now I am a CEO. Every job needed a
different skill set. But the common required thing was hard work. Put your clients first and work
hard and you can succeed in this sector.
CB: How has the industry changed?
DK: When I started, it was all about the client. For Genuity and Canaccord, it still is. But on
Wall Street and elsewhere around the world, including Canada, you can have such big balance sheets,
and such large firms, with such large conflicts of interest, that it is not about just serving the
client anymore. And when you have the largest firms generating so much of their profits from
other activities, it is really hard to put the client first. You are constantly in conflict, even
if people are well meaning.
CB: What are your thoughts about the SEC allegations against Goldman Sachs?
DK: No comment.
PR: I have no answer on that.
CB: Whats the biggest public misconception about investment banking?
PR: We dont have investment bankers getting paid hundreds of millions of dollars. It just doesnt
happen in Canada.
CB: How do you start the day?
PR: My day will change because I am moving to Toronto. But working out of Vancouver, I get up at
4:45 a.m. and check my Blackberry to see daily comments out of the U.K. I have a shower, then look
at Toronto notes and e-mails before driving to work. I arrive between 6 a.m. and 6:30 a.m. I talk
to partners in the U.K. and out east, then move on to clients. We are a producer-led firm, so I
dont sit around having coffee.
DK: I read Canadian Business.
Return to Top
17. Dont forget the basics in rush to own a home
Canwest News Service
05/18/2010
The rush is on to buy a home before the mortgage rates go up too high and, in Ontario and British
Columbia, before the harmonized sales tax is introduced on July 1, pushing prices higher.
But home buyers are well-advised not to be too hasty when it comes to signing their names to the
deed of their new homes.
A house doesnt come with a money-back guarantee, which is why its so important to be aware of
potential issues before you buy, says Henry Blumenthal, vice-president and chief underwriter, TD
Insurance. New homeowners need to know what theyre buying and ensure they can maintain and
protect their most valuable asset, because once the sold sign goes up, the buck stops with them.
By consulting the experts before you buy you can avoid being hit with unexpected expenses afterward
- like needing a new roof or furnace. Even the best-looking home can have problems under the
surface that will invalidate your home insurance.
TD Insurance advises that new home buyers hire a professional home inspector to give the place the
once-over before any cash changes hands. The inspectors job is to go over the homes structure and
major systems roof, exterior, electrical, heating, cooling and plumbing with a fine-toothed
comb to identify current or future problems. Insurers can use that report to identify areas that
could decrease or increase premiums or even make you ineligible for home insurance.
Water damage is one of the most common problems currently, water damage is responsible for about
half the home insurance claims that TD Insurance pays out. When looking at the building inspectors
report, an insurer will want to know, among other things, whether your house is susceptible to
flooding, how often it occurs and what damage it causes, and will adjust your premiums accordingly.
Outdated plumbing and electrical systems can also affect your premiums and eligibility for
insurance, as well as outdated heating systems; liability exposure (for example, an unfenced pool);
previous renovations; presence of smoke detectors; alarm systems.
The inspection identifies what repairs need to be made and at what cost, adds Bob Dunlop,
president of Carson Dunlop, a leading home inspection company. Depending on your financial
situation, what comes out of our report could have an impact on your purchase decision. It could
even give you some bargaining power with the seller.
Return to Top
18. More funding urged for post-secondary schools; Universities need to attract under-represented
groups, report says
The Gazette (Montreal)
05/18/2010
MEAGAN FITZPATRICK
Pg. A12
Post-secondary institutions need more money and better planning to meet the many pressures placed
on them, which include producing a more skilled workforce to keep Canada competitive in the global
economy, according to a report from TD Economics.
The wide-ranging report, released yesterday, discusses the challenges that lie ahead for
post-secondary schools and the barriers, financial and otherwise, for students to access them.
Now is not the time for complacency, said Don Drummond, an economic adviser for TD and one of the
reports authors.
The federal and provincial governments have corrected a lot of the difficulties that got created
by the severe budget cutbacks to post-secondary education in the 1990s. But for every step forward
theyve made in terms of improvements, I think our expectations of what the sector is going to
accomplish have been raised even farther, he said.
Expanding the student population is going to mean reaching out to traditionally under-represented
groups, like aboriginals and youth from low-income families, the TD report says. Its also going to
require engaging students at an earlier age to show them the benefits of higher education and that
it doesnt cost as much as they may think.
Misperceptions can act as a barrier to more people pursuing post-secondary education, Drummond
said.
There is compelling but distressing evidence that when students and their parents are asked about
their perceptions of the benefits and the costs of post-secondary education, they are wildly off
the mark on both. They tend to overestimate the cost and underestimate the benefits, he said.
An average undergraduate degree in 2009 cost an estimated $53,356 for a student living at home and
$80,498 for a student living away, according to statistics in the report.
Those costs are expected to rise in the coming years, and parents need to start thinking of saving
for their childrens education the way they think of saving for their own retirement, the authors
say. It must become an ingrained part of the life cycle of savings.
Funding post-secondary education is one major challenge, and the quality of the education is
another, the report suggests.
Return to Top
19. Canadas $200-million lure pulls in 19 big-name researchers
The Globe and Mail
05/18/2010
ELIZABETH CHURCH
A $200-million international recruitment drive is bringing 19 leading researchers to Canadian
campuses with
multimillion-dollar grants that are setting off alarm bells over a potential brain
drain in other countries.
The researchers half recruited from the United States, with four from Britain and the rest from
Germany, France and Brazil will each receive $10- million over seven years as the first group of
Canada Excellence Research Chairs. They represent Ottawas most forceful effort yet to signal its
commitment to big science, something critics say has been badlylacking.
Canada has to become more than ever a magnet for talent, said Industry Minister Tony Clement, in
Toronto to name the successful applicants. The announcement, he said, builds on other federal
initiatives, such as investments in campus building projects as part of Ottawas stimulus spending
and the Vanier scholarships for graduate students. All are central, he said, to the governments
innovation agenda.
Talk is cheap. We are actually doing, Mr. Clement said later in an interview, referring to
critics in the science community who say the Harper government has not committed to research in the
same way as U.S. President Barack Obama and other foreign leaders.
The scientists appointments mark the endgame in a complicated two-year process that saw some
schools outbid in the final stretch by foreign campuses intent on keeping big-name faculty. It also
underlines the high political stakes involved in recruiting big-name researchers at a time when
most countries including Canada are pinning their economic hopes on scientific advances.
While cabinet ministers held press conferences at 13 campuses across the country Monday to crow
about our gains, the British press ran angst-filled stories over the loss of four top-flight
academics.
In all, 13 universities will welcome these scientists to their campuses, most with colleagues and
graduate students in tow. As part of the recruitment package, several of their spouses were also
offered academic posts.
The list of successful schools is a surprise both for who is on it and who is not. The veterinary
college at tiny University of Prince Edward Island made the final cut and managed to recruit a
candidate, while research powerhouses such as McGill University did not. There also is not a single
female researcher among the 19 spots, an indication of how few women hold senior positions in
science and engineering, the fields that dominate the winning entries.
University of California professor Ian Gardner says his colleagues were puzzled by his decision to
pull up stakes from the Davis campus west of San Francisco to move to Prince Edward Island.
They told me I was out of my mind, Prof. Gardner, an epidemiologist who will study the health of
fish stocks, said with a chuckle.
Prof. Gardner, an Australian, said the UPEI offer came at the right time in his career. The small
size of the campus and the attention devoted to his field there was an attraction, although the
prospect of many connecting flights for international travel was not. Its a bit isolated, but
Im focusing on the positives, he said.
His arrival is a coup for the Charlottetown campus. Its really a huge vindication for all the
small universities in Canada, said Ian Dahoo, a fellow epidemiologist who has known Prof. Gardner
for two decades and was key in recruiting him.
At the University of Western Ontario, the appointment of Cambridge neuroscientist Adrian Owen is
creating an international stir. Prof. Owen, who leads a team conducting research on individuals
with severe brain injuries, has gained prominence for his ability to communicate with subjects in a
vegetative state. He will bring a team of four or more with him and expects that to grow to between
20 and 30 with additional funding from the university.
The long-term nature of the funding and the universitys existing facilities and expertise are what
convinced him to
make the move. I wasnt looking to leave Cambridge, but when I saw the offer on
the table, well, pardon the pun, it was a no-brainer, he said. It is seven years of excellent
funding and Western is more than matching it.
Not all schools were able to get the researchers they were after. The University of Toronto
received two chairs, but lost two others to a bit of arm- wrestling with their existing schools,
Mr. Clement said.
The program had planned to award 20 chairs, but fell short by one, because of competition, he said.
Schools made the final cut based on their proposal and candidate, so if a researcher backed out,
they did not have a second chance to look for a replacement and the money went somewhere else.
U of A attracted four chairs more than any other campus including two from Britain. It also
recruited virologist Michael Houghton, a member of the team that discovered the hepatitis C virus.
His arrival was made possible with an added $80-million in private and provincial funding.
At a time when many universities are cutting programs to balance budgets, the massive effort
required to attract these scholars has come under fire. A report by Toronto-Dominion Bank, released
Monday, warns that a huge investment will be required in the next six years to meet the rise in
demand for a college or university degree in some parts of the country.
Millions for top researchers is great, said economist Don Drummond, one of the reports authors,
but does not address declining standards in undergraduate education. Id still like to get my
daughter into a smaller classroom, he said.
Return to Top
Looking for TDs view on articles about the bank or the financial industry? Visit TD News & Views
for background on some stories of the moment that may come up in your discussions with customers,
colleagues and friends.
Vous cherchez des opinions et des articles de la TD au sujet du secteur bancaire ou financier?
Visitez Nouvelles et Opinions de la TD pour y trouver de linformation sur certains sujets
dactualité qui peuvent être évoqués dans vos discussions avec des clients, des collègues et des
amis.
The terms of our contract allow the Daily Media Roundup to be used exclusively by TD Bank Financial
Group employees; please do not distribute outside TDBFG. Contact Samson Yuen with any questions.
Les modalités de notre contrat permettent lutilisation exclusive du Survol quotidien des médias
par les employés du Groupe Financier Banque TD; veuillez ne pas faire circuler à lextérieur du
GFBTD. Veuillez communiquer avec Samson Yuen pour toute question.
The information presented may contain forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 and comparable safe harbour provisions of
applicable Canadian legislation, including, but not limited to, statements relating to anticipated
financial and operating results, the companies plans, objectives, expectations and intentions,
cost savings and other statements, including words such as anticipate, believe, plan,
estimate, expect, intend, will, should, may, and other similar expressions. Such
statements are based upon the current beliefs and expectations of our management and involve a
number of significant risks and uncertainties. Actual results may differ materially from the
results anticipated in these forward-looking statements. The following factors, among others,
could cause or contribute to such material differences: the ability to obtain the approval of the
transaction by The South Financial Group, Inc. shareholders; the ability to realize the expected
synergies resulting from the transaction in the amounts or in the timeframe anticipated; the
ability to integrate The South Financial Group, Inc.s businesses into those of The
Toronto-Dominion Bank in a timely and cost-efficient manner; and the ability to obtain governmental
approvals of the transaction or to satisfy other conditions to the transaction on the proposed
terms and timeframe. Additional factors that could cause The Toronto-Dominion Banks and The South
Financial Group, Inc.s results to differ materially from those described in the forward-looking
statements can be found in the 2009 Annual Report on Form 40-F for The Toronto-Dominion Bank and
the 2009 Annual Report on Form 10-K of The South Financial Group, Inc. filed with the Securities
and Exchange Commission and available at the Securities and Exchange Commissions Internet site
(http://www.sec.gov).
The proposed merger transaction involving The Toronto-Dominion Bank and The South Financial Group,
Inc. will be submitted to The South Financial Group, Inc.s shareholders for their consideration.
Shareholders are encouraged to read the proxy statement/prospectus regarding the proposed
transaction when it becomes available because it will contain important information. Shareholders
will be able to obtain a free copy of the proxy statement/prospectus, as well as other filings
containing information about The Toronto-Dominion Bank and The South Financial Group, Inc., without
charge, at the SECs internet site (http://www.sec.gov). Copies of the proxy statement/prospectus
and the filings with the SEC that will be incorporated by reference in the proxy
statement/prospectus can also be obtained, when available, without charge, by directing a request
to The Toronto-Dominion Bank, 15th floor, 66 Wellington Street West, Toronto, ON M5K 1A2,
Attention: Investor Relations, 1-866-486-4826, or to The South Financial Group, Inc., Investor
Relations, 104 South Main Street Poinsett Plaza, 6th Floor, Greenville, South Carolina 29601,
1-888-592-3001.
The Toronto-Dominion Bank, The South Financial Group, Inc., their respective directors and
executive officers and other persons may be deemed to be participants in the solicitation of
proxies in respect of the proposed transaction. Information regarding The Toronto-Dominion Banks
directors and executive officers is available in its Annual Report on Form 40-F for the year ended
October 31, 2009, which was filed with the Securities and Exchange Commission on December 03, 2009,
and in its notice of annual meeting and proxy circular for its most recent annual meeting, which
was filed with the Securities and Exchange Commission on February 25, 2010. Information regarding
The South Financial Group, Inc.s directors and executive officers is available in The South
Financial Group, Inc.s proxy statement for its most recent annual meeting, which was filed with
the Securities and Exchange Commission on April 07, 2010. Other information regarding the
participants in the proxy solicitation and a description of their direct and indirect interests, by
security holdings or otherwise, will be contained in the proxy statement/prospectus and other
relevant materials to be filed with the SEC when they become available.
Les renseignements présentés peuvent contenir des énoncés prospectifs au sens de la loi Private
Securities Litigation Reform Act of 1995 et des dispositions dexonération comparables des lois
canadiennes applicables, y compris, mais sans sy limiter, des énoncés relatifs à des résultats
financiers et dexploitation prévus, aux plans, aux objectifs, aux attentes et aux intentions, aux
économies de coûts et à dautres énoncés des sociétés, qui comprennent des termes et expressions
comme « anticiper », « croire », « planifier », « estimer », « prévoir », « avoir lintention de »
et « pouvoir », ainsi que des verbes au futur ou au conditionnel et dautres expressions
similaires. Ces énoncés sont fondés sur les croyances et les attentes actuelles de notre direction
et comportent un certain nombre de risques et dincertitudes importants. Les résultats réels
peuvent différer considérablement des résultats avancés dans les présents énoncés prospectifs. Les
facteurs suivants, entre autres choses, pourraient entraîner de tels écarts importants ou y
contribuer : la capacité dobtenir lapprobation de la transaction par les actionnaires de The
South Financial Group, Inc. (« South Financial »), la capacité de réaliser les synergies prévues
découlant de la transaction selon les montants ou léchéancier prévus, la capacité dintégrer les
activités de The South Financial Group, Inc. à celles de La Banque Toronto-Dominion en
temps
opportun et de manière rentable, et la capacité dobtenir les approbations gouvernementales de la
transaction ou de remplir dautres conditions liées à la transaction selon les modalités et
léchéancier proposés. Dautres facteurs qui pourraient faire en sorte que les résultats de La
Banque Toronto-Dominion et de The South Financial Group, Inc. diffèrent considérablement de ceux
décrits dans les énoncés prospectifs se trouvent dans le rapport annuel de 2009, dans le formulaire
40-F, pour La Banque Toronto-Dominion, et dans le
rapport annuel de 2009, dans le formulaire 10-K
de South Financial déposé auprès de la Securities and Exchange Commission (SEC) et disponible sur
le site Internet de la SEC (http://www.sec.gov).
La proposition de fusion entre La Banque Toronto-Dominion et The South Financial Group, Inc. sera
présentée aux actionnaires de The South Financial Group, Inc afin quils lexaminent. Les
actionnaires sont invités à lire la circulaire de sollicitation de procurations ou le prospectus
provisoire lié à la transaction de fusion proposée et la circulaire de sollicitation de
procurations ou le prospectus définitif lorsquil sera disponible, ainsi que les autres documents
déposés auprès de la SEC, car ils contiennent des renseignements importants. Les actionnaires
peuvent obtenir un exemplaire gratuit de la circulaire de sollicitation de procurations ou du
prospectus provisoire et ils pourront obtenir un exemplaire gratuit de la circulaire de
sollicitation de procurations ou du prospectus définitif lorsquil sera disponible, ainsi que des
autres documents ayant fait lobjet dun dépôt qui contiennent de linformation sur La Banque
Toronto-Dominion et The South Financial Group, Inc., et ce, sans frais, sur le site Internet de la
SEC (http://www.sec.gov). Des exemplaires de la circulaire de sollicitation de procurations ou du
prospectus définitif et des documents déposés auprès de la SEC qui seront intégrés par renvoi dans
la circulaire de sollicitation de procurations ou le prospectus définitif peuvent aussi être
obtenus, lorsquils seront disponibles, sans frais, en soumettant une demande [à La Banque
Toronto-Dominion, 66
Wellington Street West, Toronto (Ontario) M5K 1A2, à lattention de : Relations avec les
investisseurs, 416-308-9030] ou à The South Financial Group, Inc. Investor Relations, 104 South
Main Street Poinsett Plaza, 6th Floor, Greenville, South Carolina 29601, 1-888-592-3001.
La Banque Toronto-Dominion, The South Financial Group, Inc., leurs administrateurs et leurs
dirigeants respectifs et dautres personnes peuvent être réputés être des participants à la
sollicitation de procurations relativement à la transaction de fusion proposée. Linformation
concernant les administrateurs et les dirigeants de La Banque Toronto-Dominion est disponible dans
son rapport annuel, dans le formulaire 40-F, pour lexercice terminé le 31 octobre 2009, qui a été
déposé auprès de la SEC le 3 décembre 2009, son avis de convocation à lassemblée annuelle et sa
circulaire de la direction sollicitant des procurations, qui a été déposée auprès de la SEC le 25
février 2010. Linformation concernant les administrateurs et les dirigeants de The South
Financial Group, Inc. est disponible dans la circulaire de sollicitation de procurations de The
South Financial Group, Inc. de sa plus récente assemblée annuelle, qui a été déposée auprès de la
SEC le 7 avril 2010. Dautres renseignements sur les participants à la sollicitation de
procurations et une description de leurs intérêts directs et indirects, par titres détenus ou
autres, seront inclus dans la circulaire dinformation/le prospectus et dautres documents
pertinents qui seront déposés auprès de la SEC lorsquils seront disponibles.
THE
FOLLOWING IS A PRINT ADVERTISEMENT RUN IN
REGIONAL PUBLICATIONS COMMENCING ON OR ABOUT MAY 17, 2010
WHEN IT COMES TO SERVICE AND CONVENIENCE, THE BAR IS ABOUT TO BE RAISED EVEN
HIGHER. IMPORTANT NEWS FOR CUSTOMERS Bank Customers: to acquire Mercantile Mercantile
Bank Groups plans To Financial (TSFG). TD Bank Group, Inc. pleased to announce South
Financial we were The First. this week, holding company, the name Carolina Earlier of their under
by the purchase and in the Carolinas Carolina First that name and Florida under approval, operates
in TSFG shareholder Bank regulatory and Mercantile subject to Bank®. At which is
Convenient of the acquisition, Americas Most the completion part of TD Bank, to our
Customers. Following First will become convenience and Carolina and unparalleled grow
and Bank legendary service continue to Mercantile delivering First, we can committed to and
Carolina also were Bank TD Bank is TD Bank, of Mercantile Carolina. acquisition North
and South it a TDs proposed and in carries with And with Florida market community to our part of a
on that commitment believe being our communities expand We of stronger communities. and
members to building organizations committed charitable a time when especially during
responsibility, need us most. Bank Most Convenient AND WITH TD Bank,
Americas INLTHER5_3___IN ASSETS About BANKS ON LARGEST &LORIDA OFETHEO -S-FROM s
/NE LOCATIONS_ANDL A!4 THE WORLD s /VERV BANKSNIN &INANCIAL4ROUPnAONEKOF banks in $ ANK one of
the safest OFBTHER4 ranked as and recently ss !!MEMBER Moodys INLASSETS_NRATEDN!AAABY BILLION
Magazine by Global Finance North America Bank the same locations. Better
people at Building The same friendly THE SERVEDEBY feel is important do today n
other news we just as you and any to bank of the acquisition Please continue the status updated on
to keep you We promise to great we look forward . is bright and to you . The future Bank for you
Build The Better our goal is to TD Bank, and Shareholders. At Employees for our
Customers, times ahead Sincerely, Masrani Bharat 0RESIDENTI Most Convenient TD
Bank, Americas |
THE
FOLLOWING IS A PRINT ADVERTISEMENT RUN IN
REGIONAL PUBLICATIONS COMMENCING ON OR ABOUT MAY 17, 2010
WHEN IT COMES TO SERVICE AND CONVENIENCE, THE BAR IS ABOUT TO BE RAISED EVEN
HIGHER. IMPORTANT NEWS FOR AND CUSTOMERS Bank Customers: First Mercantile to acquire
Carolina First and plans To Carolina Financial Groups . (TSFG). TD Bank Group, Inc
pleased to announce South Financial we were company, The Bank. Earlier this week, their
holding name Mercantile purchase of under the Bank by the and in Florida and Mercantile under that
name Carolinas approval, in the TSFG shareholder First operates and Carolina subject to regulatory
Bank®. At which is Convenient the acquisition, Most of Bank, Americas the completion
part of TD to our Customers. Following Bank will become convenience and Mercantile and
unparalleled grow and First legendary service continue to Carolina delivering Bank, we can to
Mercantile also were committed First and TD Bank is TD Bank, of Carolina market.
acquisition and in our Florida a TDs proposed Carolina with it And with and South carries to
North part of a community on that commitment believe being our communities expand We of stronger
communities. and members to building organizations committed charitable a time when
especially during responsibility, need us most. Bank Most Convenient AND WITH
TD Bank, Americas INLTHER5_3___IN ASSETS About BANKS ON LARGEST &LORIDA OFETHEO
-S-FROM s /NE LOCATIONS_ANDL A!4 THE WORLD s /VERV BANKSNIN &INANCIAL4ROUPnAONEKOF banks in $
ANK one of the safest OFBTHER4 ranked as and recently ss !!MEMBER Moodys INLASSETS_NRATEDN!AAABY
BILLION Magazine by Global Finance North America Bank the same locations.
Better people at Building The same friendly THE SERVEDEBY feel is
important do today n other news we just as you and any to bank of the acquisition Please continue
the status updated on to keep you We promise to great we look forward . is bright and to you . The
future Bank for you Build The Better our goal is to TD Bank, and Shareholders. At
Employees for our Customers, times ahead Sincerely, Masrani Bharat 0RESIDENTI Bank
Most Convenient TD Bank, Americas |
THE
FOLLOWING IS A PRINT ADVERTISEMENT RUN IN
REGIONAL PUBLICATIONS COMMENCING ON OR ABOUT MAY 17, 2010
WHEN IT COMES TO SERVICE AND CONVENIENCE, THE BAR IS ABOUT TO BE RAISED EVEN
HIGHER. IMPORTANT NEWS FOR CUSTOMERS First to acquire Carolina First Customers: plans To
Carolina Financial Groups . (TSFG). TD Bank Group, Inc pleased to announce South
Financial we were company, The Bank. Earlier this week, their holding name Mercantile
purchase of under the Bank by the and in Florida and Mercantile under that name Carolinas approval,
in the TSFG shareholder First operates and Carolina subject to regulatory Bank®. At
which is Convenient the acquisition, Most of Bank, Americas the completion part of TD to our
Customers. Following Bank will become convenience and Mercantile and unparalleled grow
and First legendary service continue to Carolina delivering Bank, we can to Mercantile also were
committed First and TD Bank is TD Bank, of Carolina market. acquisition and in our
Florida a TDs proposed Carolina with it And with and South carries to North part of a community on
that commitment believe being our communities expand We of stronger communities. and
members to building organizations committed charitable a time when especially during
responsibility, need us most. Bank Most Convenient AND WITH TD Bank,
Americas INLTHER5_3___IN ASSETS About BANKS ON LARGEST &LORIDA OFETHEO -S-FROM s /NE
LOCATIONS_ANDL A!4 THE WORLD s /VERV BANKSNIN &INANCIAL4ROUPnAONEKOF banks in $ ANK one of the
safest OFBTHER4 ranked as and recently ss !!MEMBER Moodys INLASSETS_NRATEDN!AAABY BILLION
Magazine by Global Finance North America Bank the same locations. Better
people at Building The same friendly THE SERVEDEBY feel is important do today n
other news we just as you and any to bank of the acquisition Please continue the status updated on
to keep you We promise to great we look forward . is bright and to you . The future Bank for you
Build The Better our goal is to TD Bank, and Shareholders. At Employees for our
Customers, times ahead Sincerely, Masrani Bharat 0RESIDENTI Bank Most Convenient TD
Bank, Americas |
THE FOLLOWING IS A COMMUNICATION SENT TO EMPLOYEES OF TD BANK, AMERICAS MOST
CONVENIENT BANK AND THE TORONTO-DOMINION BANK ON MAY 19, 2010
Daily News Brief
May 19, 2010
Compiled by Lauren S. McClintock, Corporate and Public Affairs
TD BANK NEWS
1. |
|
TD Bank eager to expand Courier-Post (NJ) [Similar stories appeared in the Myrtle
Beach Sun (SC), the Aiken Standard (SC), and Times-News (NC), and on WJNO Newsradio and
WYFF-TV NBC CH 4 (SC & NC).] |
TD Bank Financial Groups acquisition of a South Carolina-based bank chain is contingent on
stockholder and regulatory approval, with a vote likely to come this summer.
2. TD Bank Buys South Financial, U.S. Taxpayers Win TheStreet.com
The deal reached by TD Bank Financial Group(TD) to purchase The South Financial Group (TSFG) with
significant assistance from the Treasury points to a potentially big change in how large, troubled
banks will be resolved.
3. |
|
South Financial buyer wants to be among top three in S.C. Charleston Regional
Business Journal (SC) |
TD Bank Financial Group could look to buy other struggling banks in South Carolina after acquiring
The South Financial Group of Greenville. The Canadian bank already has been aggressive with its
entrance in the Florida market, acquiring four banks there in fewer than 60 days. That includes
South Financials Florida subsidiary, Mercantile Bank. [TD Banks Fred Graziano is quoted.]
4. |
|
Barnegat Township stops accepting credit cards for tax payments Press of Atlantic
City (NJ) |
Barnegat Township residents no longer can pay their tax bills using credit cards, now that the bank
processing the payments has stopped covering the credit companies surcharges, township officials
said. TD Bank last month notified Barnegat of the change, which was purely a financial decision,
Township Administrator Dave Breeden said.
5. |
|
TD Bank to celebrate grand opening with celebration Cambridge Chronicle (MA) |
To celebrate the recent opening of its store at 235 Alewife Brook Parkway, TD Bank will hold a
free, public celebration Saturday, May 22, from 9 a.m. to 2 p.m.
6. |
|
TD Bank paying kids for summer reading Queens Courier (NY) |
Page 1 of 17
In an effort to motivate more children to read during the summer months, while simultaneously
teaching them a thing or two about savings, TD Bank has officially launched their eighth annual
Summer Reading Program, which started May 3 and lasts until
September 30. The TD Charitable Foundation donated $56,000 to New York libraries, including the
South Jamaica Queens Library.
7. |
|
Judge OKs Sterling National auction Worcester Telegram (MA) |
Judge Joan N. Feeney of U.S. Bankruptcy Court in Boston yesterday granted a request for relief
filed by TD Bank, which said it was owed $5.4 million by the country clubs owner. In its filing,
TD Bank said it wanted to foreclose upon, auction and sell the real property and other tangible
assets.
8. |
|
Bank Employee Claims Rothstein Ignorance South Florida Business Journal |
A TD Bank employee said under oath Tuesday that she didnt notice any red flags or warning signs
for fraud about bank accounts of Ponzi schemer Scott Rothstein.
INDUSTRY NEWS
1. Banks return to charging credit card, checking account fees USA Today
Amid new limits on some of the industrys most profitable practices, banks are turning back to
familiar money-making strategies: annual credit card fees, monthly checking account fees and
product bundling.
2. |
|
Credit card rules cut bank fees by $5B USA Today |
New credit card and overdraft restrictions will save U.S. consumers from being charged at least $5
billion in fees this year alone at the largest U.S. retail banks and credit card companies, a USA
TODAY analysis reveals.
3. |
|
Sovereign, M&T Talks Appear Dead The Wall Street Journal |
Sovereign Bank and M&T Bank Corp. were in advanced merger discussions in recent weeks but the talks
are dead for now, people familiar with the matter said Tuesday.
4. |
|
For Prepaid Cards, Gift Label No Longer Welcome American Banker |
How is a gift card different from a prepaid card? Consumers might see little difference between the
two types of plastic cards, both of which store funds. But with regulations set to take effect this
summer that significantly restrict fees on gift cards, prepaid companies are scrambling to make
sure their products are considered general-purpose payment products instead.
TD BANK NEWS
1. |
|
TD Bank eager to expand
By Eileen Stilwell
May 18, 2010 Courier-Post (NJ) |
Page 2 of 17
CHERRY HILL TD Bank Financial Groups acquisition of a South Carolina-based bank chain is
contingent on stockholder and regulatory approval, with a vote likely to come this summer.
TD Bank Financial Group announced its intention Monday to buy the South Financial Group which
has 176 stores in North and South Carolina and deposit-rich Florida for $192 million.
If the acquisition is approved, shareholders will be allowed to convert their equity into cash or
TD Bank stock, said TD spokeswoman Jennifer Morneau.
TD is headquartered in Cherry Hill and Portland, Maine. TD Bank has $152 billion in assets and
employs about 22,000 people in its 1,000 U.S. branches.
When TD bought the former Commerce Bank in March 2008, the combined assets of the two companies was
$109 billion.
TD Bank Financial Group, which includes the companys Canadian holdings, had $567 billion in assets
at the end of January.
TD Bank kept the Commerce moniker of Americas Most Convenient Bank, but changed its signature
color from red to green.
Our hope is we will continue to grow and add staff, said Morneau. But its too soon to tell if
this new acquisition will create any new jobs in our Cherry Hill headquarters, because we intend to
keep local management in the new branches.
Growth by acquisition is a different way of doing business than the Commerce model of building new
branches, economist Joel L. Naroff said.
If you buy, you can expand more quickly, but invariably youll get some unprofitable branches, and
youll have to accept the headaches that come with combining cultures, he explained.
If you build, you can build only where new branches make sense. One business model is not
necessarily better than the other. It just means TD is going in a different direction than Commerce
did and imprinting its own style.
The major thrust of the acquisition is that it helps TD Bank which aims to dominate the market
between Maine and Florida establish a footprint in North and South Carolina.
If the sale becomes final, Georgia will be the only state in the targeted region without a TD bank.
Top
2. |
|
TD Bank Buys South Financial, U.S. Taxpayers Win
By Philip van Doorn
May 18, 2010 TheStreet.com |
Page 3 of 17
CHERRY HILL, N.J. (TheStreet) The deal reached by TD Bank Financial Group(TD) to purchase The
South Financial Group (TSFG) with significant assistance from the Treasury points to a potentially
big change in how large, troubled banks will be resolved.
The South Financial Groups main subsidiary is Carolina First Bank of Greenville, S.C. The bank was
not included in the most recent version of TheStreets Bank Watch List of undercapitalized
institutions because its Tier 1 leverage ratio was 7.13% and its total risk-based capital ratio
stood at 10.55% as of March 31, putting it above the 5% and 10% levels required for most banks to
be considered well capitalized by regulators.
However, in a recent filing with the Securities and Exchange Commission, South Financial said the
bank was no longer deemed to be well capitalized because of an April 30 order from state
regulators and the Federal Deposit Insurance Corp. requiring the bank to raise its capital ratios
to 8% and 12% respectively within 120 days.
The South Financial Group posted a first-quarter net loss of $80.6 million on April 20 after losing
$676.3 million in 2009, mainly from charge-offs of delinquent construction loans and commercial
loans, and it had $12.4 billion in total assets at quarters end, down from $13.3 billion at the
same time a year earlier.
Late Monday, TD Bank agreed to pay about $61 million, or 28 cents a share, for South Financials
common stock, which closed at 30 cents yesterday. While TD Bank CEO Ed Clark touted the deal as
exactly the kind of unassisted transaction that weve said were comfortable doing, he meant
unassisted by the FDIC, which would have absorbed losses if the bank had failed.
Portraying this deal as unassisted, however, was a stretch as there was significant assistance
from the Treasury, which agreed to sell $347 million worth of South Financial preferred stock and
warrants to TD for just $130.6 million. South Financial had issued the preferred shares to the
Treasury in return for bailout money provided in December 2008 via the Troubled Assets Relief
Program, or TARP. The compromise on the TARP monies looks like the trade-off for doing the deal
before South Financials situation deteriorated further.
The deal furthers the expansion strategy of TD Bank on the East Coast, bringing in 176 more
branches, including 66 in Florida, and comes comes a month after TD Bank acquired 69 branches as a
result of three three bank failures in Florida.
TDs largest acquisition on April 16 was Riverside National Bank of Fort Pierce, Fla., which had 58
branches and $3.42 billion in total assets. TD Bank won the bid for Riverside over a bid by
Seacoast Banking Corp.(SBCF) of Stuart, Fla., in part because TD was willing to accept a 50-50
loss-sharing deal with the FDIC, while most similar deals up to that point in the banking crisis
had featured 80% loss sharing by the FDIC.
Since Carolina Firsts prospects of raising capital it required were bleak, the TD deal looks like
a winner for all parties. While the Treasury is losing roughly $216 million, it would have lost all
of its TARP investment if Carolina First Bank had failed, and the FDICs insurance fund would have
probably taken a much larger hit.
Top
Page 4 of 17
3. |
|
South Financial buyer wants to be among top three in S.C.
By Scott Miller
May 19, 2010 Charleston Regional Business Journal (SC) |
TD Bank Financial Group could look to buy other struggling banks in South Carolina after acquiring
The South Financial Group of Greenville.
The Canadian bank already has been aggressive with its entrance in the Florida market, acquiring
four banks there in fewer than 60 days. That includes South Financials Florida subsidiary,
Mercantile Bank.
When we enter any market, our goal is always to be in the top three in deposit share and top three
in store count, said Fred Graziano, executive vice president and head of retail banking for TD
Bank.
That could be accomplished through acquisitions or branch construction, he said. Additionally, the
bank will keep longer hours than competitors, possibly remaining open seven days a week, to attract
customers, Graziano said.
TD Bank announced Monday that it agreed to purchase South Financial for about $192 million,
anticipating about $1 billion in future losses on the South Financial portfolio. If the acquisition
is approved by federal regulators and shareholders this summer, TD will add $9.8 billion in
deposits and pick up 176 branches: 83 in South Carolina, 66 in Florida and 27 in North Carolina.
To rank among the top three in South Carolina, TD Bank would need an additional $1 billion in
deposits and 30 more branches. The top three banks in South Carolina form 37% of the deposit market
share, according to figures from the Federal Deposit Insurance Corp.:
|
|
|
|
|
|
|
|
|
Bank |
|
Deposits |
|
Market Share |
Wachovia Bank |
|
$11.46 billion |
|
|
16.42 |
% |
Bank of America |
|
$8.08 billion |
|
|
11.57 |
% |
BB&T Corp. |
|
$6.32 billion |
|
|
9.06 |
% |
With the South Financial acquisition, TD Bank ranks fifth in number of stores and fourth in
deposits with $5.5 billion, according to the banks analysis.
The bank ranks much lower in North Carolina, at 18th in number of branches and 21st in deposits.
There, TD Bank would need more than 250 additional branches and $30 billion in deposits.
TD Bank, or Toronto-Dominion, has the capital to fund growth in the Carolinas and sacrificed little
in acquiring South Financial, said Tony Plath, a banking professor at the University of North
Carolina at Charlotte.
TD bought South Financial without FDIC assistance for about $192 million. That includes $61 million
for shareholders and $130.6 million to purchase the $347 million in preferred shares that the U.S.
Treasury acquired as part of the Troubled Asset Relief Program.
It would be more expensive for Toronto-Dominion to take all of its employees to lunch at
Starbucks, Plath said. Lets face it: South Financial is a rounding error on their balance sheet.
They could do another 20 of these deals and not break a sweat.
Page 5 of 17
TD Bank Financial Group has $567 billion in assets and 74,000 employees worldwide. It is the
sixth-largest bank in North America by branches and serves more than 18 million customers around
the globe.
Last month, TD Bank bought three shuttered Florida banks Riverside National Bank, First Federal
Bank of North Florida and AmericanFirst Bank for $3.8 billion from the FDIC.
I think TD will look to make others deals in the Carolinas and Georgia. Theyre going to go after
other weak, undercapitalized banks, Plath said. I think youll see them acquire a half dozen in
Georgia, North Carolina and South Carolina in the next two years. They want scale and they want
position in the market.
South Financial President and CEO Lynn Harton hinted as much when announcing the merger Monday.
Graziano said bank acquisitions are just one option.
Thats a strategy where, if something compelling comes along, we would do it, he said. If we
never get the opportunity to make an acquisition, thats OK. Well build out by finding sites and
building out a network.
TD Bank had been in negotiations with South Financial since December. Graziano wouldnt comment on
whether or not TD Bank has had similar discussions with other S.C. banks.
But like most banks, were always looking at opportunities, he said.
TD Bank still is evaluating specific markets within South Carolina for expansion, Graziano said.
Top
4. |
|
Barnegat Township stops accepting credit cards for tax payments
Eric Scott Campbell
May 18, 2010 Press of Atlantic City (NJ) |
Barnegat Township residents no longer can pay their tax bills using credit cards, now that the bank
processing the payments has stopped covering the credit companies surcharges, township officials
said.
TD Bank last month notified Barnegat of the change, which was purely a financial decision, Township
Administrator Dave Breeden said. He estimated that for the township to absorb the expense of credit
card surcharges of 2 percent to 2.5 percent, it would cost taxpayers about $90,000 to $100,000 per
year.
Instead, the township stopped accepting credit card payments for tax bills after Friday, the same
day the bank stopped covering the fees.
Breeden said Barnegat is exploring alternative arrangements, including online payments: We want to
make it as convenient as possible for residents to pay tax bills.
The next tax-payment deadline is Aug. 1.
Page 6 of 17
Credit cards are still good for utility payments and court fees, which are typically much smaller
than tax bills and thus cost the banks that process them less in surcharges, Breeden said.
Whether Barnegats experience with TD Bank is part of a trend is unclear. The burden of credit card
surcharges has not been a recent conversation topic at the League of Municipalities, said Bill
Dressel, its executive director.
Top
5. |
|
TD Bank to celebrate grand opening with celebration
May 17, 2010 Cambridge Chronicle (MA) |
To celebrate the recent opening of its store at 235 Alewife Brook Parkway, TD Bank will hold a
free, public celebration Saturday, May 22, from 9 a.m. to 2 p.m.
The celebration will feature food, refreshments, giveaways, a balloon artist, stilt walker, and
more. A steel drum band will perform live music. A ribbon-cutting ceremony will take place at 12:30
p.m., followed by a donation presentation from the TD Charitable Foundation to Homeowners Rehab
Inc.
TD Bank focuses on delivering customer service by providing seven-day branch banking with extended
hours, free Penny Arcade coin-counting machines, hassle-free products, free online banking and bill
pay at www.tdbank.com, local lenders making local lending decisions, and treats for children and
dogs. Customers also have access to a network of 2,600 ATMs from Maine to Florida. The new TD Bank
store in Cambridge is open Monday through Wednesday, 8 a.m. to 6 p.m.; Thursday and Friday, 8 a.m.
to 8 p.m.; Saturday, 8 a.m. to 3 p.m.; and Sunday, 11 a.m. to 4 p.m.
Top
6. |
|
TD Bank paying kids for summer reading
By Despina Kouvaros
May 18, 2010 Queens Courier (NY) |
With summer right around the corner, children are planning a variety of activities to keep
themselves entertained during the homework-free months. Biking, swimming, playing sports and video
games are all high up on their list. Reading . . . not so much.
According to the Center for Summer Learning, elementary school students lose more than two months
worth of reading performance each year during the summer. The Department of Education believes that
this literary gap will produce approximately 12 million unqualified workers within the next decade.
In an effort to motivate more children to read during the summer months, while simultaneously
teaching them a thing or two about savings, TD Bank has officially launched their eighth annual
Summer Reading Program, which started Monday, May 3 and lasts until Thursday, September 30.
Page 7 of 17
The TD Charitable Foundation donated $56,000 to New York libraries, including the South Jamaica
Queens Library.
Now more than ever our children need resources and options to help them learn the importance of
savings so they are financially literate for years to come, said Elizabeth K. Warn, executive vice
president of community relations at TD Bank and president of the TD Bank Charitable Foundation.
The program, for students 18 years of age and younger, rewards those who read 10 books during the
summer with a $10 deposit to their TD Bank Young Savers Account.
According to Lauren Sullivan, TD Banks media relation specialist, About 10,000 to 15,000 children
have participated in the Summer Reading program the past few years and we have seen a rise in
participation.
All children have to do is fill out the summer reading form with all of the names of the books read
during the summer and bring it to the nearest TD Bank location in order to receive the $10 deposit.
The form is also available online at www.tdbank.com/summerreading.
TD Bank realizes the difficulty parents have when it comes to getting their children to read. In
hopes of making this process both easier, as well as fun, they offer a variety of tips on their
website, including: letting their child choose books that would interest them, reading the story
with them, asking them questions about the story and setting up a time for reading, making it a
scheduled activity.
Sullivan noted, At TD Bank, we believe that reading and financial literacy are key for future
education and economic success.
Top
7. |
|
Judge OKs Sterling National auction
By Lisa Eckelbecker
May 18, 2010 Worcester Telegram (MA) |
A bankruptcy court judge has granted a banks request to move forward with a foreclosure auction of
Sterling National Country Club, the 18-hole private golf course on the Sterling-Lancaster line that
shut down in February.
Judge Joan N. Feeney of U.S. Bankruptcy Court in Boston yesterday granted a request for relief
filed by TD Bank, which said it was owed $5.4 million by the country clubs owner. In its filing,
TD Bank said it wanted to foreclose upon, auction and sell the real property and other tangible
assets.
An auction is scheduled for 11 a.m. Thursday at the country club at 33 Albright Ave., Sterling, by
JJ Manning Auctioneers. Two previous attempts to auction the property were postponed because of the
bankruptcy case. TD Bank spokeswoman Jennifer L. Morneau said today in an e-mail, We can confirm
that the court has granted relief to hold the auction on the 20th, and the auction has been
rescheduled to that date.
Page 8 of 17
Sterling National has been owned by Sterling Property Holder Limited Partnership, and its
operations were run by Sterling Property Management Limited Partnership. Both entities are linked
to Potomac Realty Capital LLC of Needham, a real estate financing company.
The country club closed its doors in February, dismissing workers and distressing couples who had
deposited money for wedding receptions. The following month, TD Bank advertised plans to sell the
243-acre club at a foreclosure auction.
Those plans were postponed when the clubs owners filed for Chapter 7 bankruptcy protection to
liquidate all assets. TD Bank then obtained court approval to take possession of the property so it
could maintain and repair it, a measure particularly critical for the countrys clubs golf course
as spring approached.
JJ Manning Auctioneers has reported brisk interest in the country club from a number of parties,
including national groups. When asked if this auction will likely go forward, JJ Manning President
Justin J. Manning said in an e-mail, it is as definite as a foreclosure can be.
The sale of the country club, however, may leave little else for distribution to other creditors of
Sterling National.
In court filings yesterday, the country clubs owners said they possessed about $39,543 in assets,
listing a 2003 dump truck, a trailer, about $5,535 in accounts receivable and a small amount of
money in a savings account. The owners said liabilities to those with unsecured claims total about
$279,500, including people who had deposited thousands of dollars to hold events at the club.
A special town meeting vote in Sterling yesterday fell short of the two-thirds majority needed for
the town to pursue buying the club for use as a municipal golf course.
Top
8. |
|
Bank Employee Claims Rothstein Ignorance
By Paul Brinkmann
May 19, 2010 South Florida Business Journal |
A TD Bank employee said under oath Tuesday that she didnt notice any red flags or warning signs
for fraud about bank accounts of Ponzi schemer Scott Rothstein.
Thats despite hearing one of Rothsteins potential clients ask her if it was possible for bank
accounts with a zero balance to have money in them.
The deposition of Jennifer Kerstetter, an assistant branch manager, shed more light on how
Rothstein used local banks to further his fraud.
Kerstetter said she regularly printed account statements for Rothstein and his uncle, Bill
Boockvor. She said Boockvor regularly came into the banks office to retrieve paper printouts of
account statements, even though RRA had access to the same information on the Internet.
Page 9 of 17
Later, some of those printouts wound up showing altered account balances. Kerstetter said several
printouts obtained from RRA or victims of the Ponzi scheme were obviously falsified, but she didnt
know who had altered the documents. One of the false account statements showed a $368 million
balance on March 20, 2009.
I would print out and e-mail how much he had in the bank, total, and it was never that high,
Kerstetter said.
The blond, ponytailed Kerstetter wore gold hoop earrings and a black jacket with a skirt for the
deposition, which was conducted by Theresa Van Vliet, an attorney with the Fort Lauderdale office
of Genovese Joblove & Battista. Van Vliet represents the trustee overseeing the RRA bankruptcy.
Kerstetter said Rothstein and the law firm enjoyed immediate deposit privileges, which allowed them
to make withdrawals on checks that were just entered into the account without the delays that were
customary on some accounts.
TD Bank itself has denied any knowledge of Rothsteins fraud and is defending itself against civil
allegations. The bank has said repeatedly that it believes facts will prove that the bank did not
conspire with Mr. Rothstein and/or his firm.
Kerstetter said shes worked for the bank for years, formerly with Commerce Bank in New Jersey,
before it was bought by TD Bank.
She testified that she received regular training about job duties, which included reviewing reports
on branch deposits, loans, significant balance changes, overdrafts and other operations.
On Oct. 15, just days before the Ponzi scheme was exposed, Kerstetter said she gave Boockvor an
account printout that showed a zero balance.
I showed him the printout. I said, Are you sure you want this one? It has zero dollars,
Kerstetter said. He said yes.
Later that day, Kerstetter said, she was directed to attend a meeting with several new investors
for the Ponzi scheme, including Dean Kretschmar. She was to help them open new TD Bank accounts.
She said Boockvor warned her beforehand: Watch what you say.
Did you wonder why he said that? Van Vliet asked.
I was kinda taken aback, Kerstetter said. Maybe he was just paranoid.
Kerstetter testified that her contact with Rothstein was limited over the years. But, she also said
one of the people at the Oct. 15 meeting assumed she knew Rothstein well, and she played along: I
didnt really know what to say. I said yeah.
Kerstetter said the new investors asked her if it was possible for an account where the balance
could say zero and not actually be zero.
Kerstetter said she thought about sweep accounts and said it might be possible. According to
Investopedia, a sweep account allows money above or below a certain balance to be automatically
transferred into higher interest-bearing accounts.
Page 10 of 17
Finally, Kerstetter said one of the new investors asked her if the bank could guarantee that only a
certain person could use an account.
He asked me in such a way that I did not understand it at all, Kerstetter said.
Two additional TD Bank employees are expected to be deposed this week: Roseanne Caretsky, a branch
manager, and Frank Spinosa, a former senior VP.
Top
INDUSTRY NEWS
1. |
|
Banks return to charging credit card, checking account fees
By Kathy Chu
May 19, 2010 USA Today |
Amid new limits on some of the industrys most profitable practices, banks are turning back to
familiar money-making strategies: annual credit card fees, monthly checking account fees and
product bundling.
The developments are part of a new era of consumer banking, analysts say, one with more fees but
also, more safety nets and disclosures for consumers.
As measures take effect this year to overhaul credit card and overdraft practices, What youre
essentially doing is squeezing the balloon, (so fees) are going to pop up somewhere else, says
Bart Narter, senior vice president at Celent, a bank research and consulting firm. Yet, ongoing
regulatory scrutiny means that new fees rolled out by the industry will generally be more fair,
and unlike overdraft charges, wont disproportionately affect the poorest consumers, Narter says.
Some banks are already taking steps that could lessen the blow of the regulations. TCF Financial,
based in Wayzata, Minn., has eliminated free checking accounts. (TCF customers can still avoid
fees, though, if they have direct deposit or meet balance requirements.) Narter, in a recent Celent
report, notes that overdraft fees are the engine that pulls along free checking, so with less fee
income, banks will have to consider changes to their business practices.
Meanwhile, Fifth Third Bank has started bundling identity-theft protection services with its
checking account and charging a monthly fee of $7.50. And Bank of America has launched a product
that packages together a business and a personal checking account, which Celent believes will
drive profitable accounts.
Making up for the impact
Neil Cotty, BofAs chief accounting officer, said on a recent analysts call that the bank will
look to mitigate the impact of overdraft restrictions, which could cost it roughly $1 billion in
2010.
You should expect that customers will have a choice of banking more efficiently, bringing more
relationships to us or paying a maintenance fee, he said.
Page 11 of 17
On the credit card side, BofA is testing annual fees of $29 to $99 on a small percentage of
accounts, bank spokeswoman Anne Pace says, to see how much customers value their cards. Citigroup
is charging a $60 yearly credit card fee due to increased business costs, but will credit that fee
back if customers charge $2,400 on the credit card within 12 months.
Leslie Parrish, a senior researcher at the Center for Responsible Lending, an advocacy group, says
that while its always an area of concern to see banks charging more, when banks have to disclose
the prices upfront, its a good thing for consumers.
Advocates warn that without an independent consumer protection bureau, a proposal championed by
Senate Banking Committee Chairman Christopher Dodd, D-Conn., banks could find ways to get around
the rules when Congress appetite for reform wanes. They say that despite changes to industry
practices, consumers still have to be on guard against aggressive bank fees.
Gail Hillebrand at Consumers Union says that while the Federal Reserve rules clamp down on debit
card overdrafts, they dont prevent banks from paying overdrawn checks and charging a hefty fee.
(Banks contend that consumers want this service because if the check bounces, they could face
merchant and bank fees.) Banks are also still allowed to clear transactions from highest to lowest
dollar amount, emptying the account more quickly and triggering more overdraft fees.
Slipping through a loophole?
Additionally, the credit card law created a loophole that Hillebrand says the Federal Reserve has
yet to address. The law requires banks that raise consumers rates to a penalty interest rate
because of a 60-day late payment to lower it if the first six consecutive payments are made on
time. The problem is that, If youve just had an economic emergency, you may not be able to pay
the first payment on time, notes Hillebrand, adding that consumers should get their rates lowered
after any six consecutive on-time payments.
Ultimately, consumers rather than issuers may bear the heaviest burden from the credit card
law, contrary to its intent, says Sanjay Sakhrani, an analyst at Keefe Bruyette & Woods. Thats
because some consumers will no longer be able to get credit. Also, many issuers raised consumers
credit card interest rates before the law took effect, Sakhrani notes.
By law, banks are required to review the accounts of consumers who had their rates raised since
January 2009 and to lower the rate if indicated. But under the Feds proposed rule, banks have
ample leeway over whether to actually do so.
Jim Brush, the co-owner of Key West Key Lime Pie, in Big Pine Key, Fla., says the governments
crackdown on bank fees wont reverse the damage already done. In the past year, Brush has closed
six of his nine credit card accounts after banks repeatedly lowered his card limits to just above
his balance and raised his interest rates despite his on-time payment record. He still has three
credit cards with American Express, he says, because thats the only company that didnt lower his
limit or raise his rates.
Even though the government put these restrictions in place to try to protect consumers, as weve
seen, the banks and credit card companies have always found ways around them, says Brush. I just
dont feel safe with banks anymore.
Top
Page 12 of 17
2. |
|
Credit card rules cut bank fees by $5B
By Kathy Chu
May 19, 2010 USA Today |
New credit card and overdraft restrictions will save U.S. consumers from being charged at least $5
billion in fees this year alone at the largest U.S. retail banks and credit card companies, a USA
TODAY analysis reveals.
The analysis based on institutions own estimates comes during a year when new rules are
kicking in to address unfair credit card rate increases and steep bank overdraft fees. It
highlights the sizable dent these rules will have on an industry blamed for pushing consumers
deeper into distress during the recession.
In recent years, banks made it easier for consumers to overdraw their bank accounts and raised
credit card fees and rates. As consumer outcry swelled in the recession, Congress passed a credit
card law and the Federal Reserve issued a regulation to crack down on banks aggressive overdraft
policies on debit cards.
Lawmakers hope the restrictions will mean much-needed savings for consumers, boosting spending and
the economy. Indeed, new data show the measures are their own little stimulus for the economy,
keeping billions in the pockets of consumers rather than in profits gained from deceptive
practices, says Rep. Carolyn Maloney, D-N.Y., co-author of card reform signed into law last year.
USA TODAYs analysis relies on institutions projections of what they will give up under the new
rules, gathering data from the 10 largest retail depository institutions and the 10 largest holders
of credit card receivables, as tracked by SNL Financial.
Of the 10 institutions with the largest amount of credit card receivables, seven gave estimates
about the credit card laws impact. In all, the issuers Citigroup, Bank of America, JPMorgan
Chase, Wells Fargo, U.S. Bancorp, HSBC North America and Barclays Group US will forgo at least
$2.5 billion to $3.1 billion in fees just in 2010. Also, seven of the top 10 depositary
institutions expect to take a combined $2.4 to $2.6 billion hit under the new overdraft rules and
banks voluntary policy changes.
R.K. Hammer Investment Bankers predicts that institutions will give up at least $9.9 billion in
revenue a year due to the credit card law. Moebs Services estimates that the industrys overdraft
revenue will shrink by $1.9 billion, to $35.2 billion this year. While some institutions are moving
away from overdraft coverage, others are boosting fee income with new programs, Moebs says.
Scott Talbott, a senior vice president at the Financial Services Roundtable, warns that the total
cost of the credit card and overdraft regulations will be even higher than bank estimates, which
dont take into account the loss of services and credit that would be available.
Top
Page 13 of 17
3. |
|
Sovereign, M&T Talks Appear Dead
By Dennis K. Berman and Carrick Mollenkamp
May 19, 2010 The Wall Street Journal |
Sovereign Bank and M&T Bank Corp. were in advanced merger discussions in recent weeks but the talks
are dead for now, people familiar with the matter said Tuesday.
The deal would have catapulted Sovereigns owner Spains Banco Santander SA into the
upper-ranks of U.S. banking, at a time when many European banks are seen as too weak to make big
acquisitions.
Even with troubles in the euro-zone economies, Santander is eager to push into the U.S. market,
using Sovereign as a base for expansion.
M&T has remained independent amid vast consolidation of the regional-banking market. The bank has a
market capitalization of $10.4 billion.
A 22.5% stake in the bank has recently been put into play, after M&Ts largest shareholder
Allied Irish Banks PLC announced plans to divest the holdings to shore up its own flagging
capital base.
The plan under discussion involved M&T buying Sovereign from Santander, said one person familiar
with the discussions. Santander would then get a stake in the newly merged M&T, this person said.
The next step involved Santander purchasing the AIB stake, this person said.
Talks were active in recent weeks, but have since fallen apart. M&T grew skeptical of the
combination, said people familiar with the matter. They added that the talks arent ongoing, for
now. One potential outcome is that the AIB stake could be sold on the open market,
Despite the housing downturn in Spain, Santander has been seen as a strong survivor of Europes
leading banks. The recent deal talks show it still has has robust intentions for the U.S. market.
Top
4. |
|
For Prepaid Cards, Gift Label No Longer Welcome
By Andrew Johnson
May 19, 2010 American Banker |
ORLANDO How is a gift card different from a prepaid card?
Consumers might see little difference between the two types of plastic cards, both of which store
funds. But with regulations set to take effect this summer that significantly restrict fees on gift
cards, prepaid companies are scrambling to make sure their products are considered general-purpose
payment products instead.
The subtle distinction has prompted prepaid marketers to revamp their sales strategies and
packaging, and some are even abandoning some of their products that might be mistaken for gift
cards.
Page 14 of 17
Its causing a lot of confusion, Judith Rinearson, a partner with the Bryan Cave LLP law firm in
New York, said this week at the Card Forum and Expo conference here. Millions and millions of
pieces of plastic are going to have to be destroyed.
Thats because gift cards are subject to strict new rules the Federal Reserve finalized in March as
part of provisions included in the Credit Card Accountability, Responsibility and Disclosure Act of
2009. The new rules are included in the Electronic Fund Transfer Act.
In addition to limiting interest rate increases, late fees and other practices by credit card
issuers, the legislation also changed when and how gift card providers can charge fees and imposed
new requirements for expiration dates.
The changes take effect Aug. 22 and apply to open-loop gift cards, closed-loop or store gift cards
and gift certificates. They exclude general-purpose reloadable cards as well as loyalty, reward and
rebate prepaid cards.
Fees are typically a crucial component of prepaid card marketers business models, so they are
paying close attention to the language of the law, especially sections related to the marketing and
placement of their products at retailers.
For example, if you have a list of uses on a card for teenagers and one of them says great gift
for your teen, that now becomes marketed as a gift card, said Rinearson, who also chairs the
government relations working group at the National Branded Prepaid Card Association.
The Feds rules address prepaid cards whose packaging implies they could be used as a gift card.
General-purpose products placed next to gift cards at stores without signage differentiating
between the two would also fall under the laws jurisdiction.
In its final rule, the Fed said a reloadable network-branded prepaid card would be considered a
gift card if, for example, the issuer promoted it in advertisements as the perfect gift during
the holiday season.
The key consideration is whether a consumer acting reasonably under the circumstances could be led
to believe that all certificates or cards referenced in the advertisement or the sign are gift
cards or gift certificates, the rule states.
Similarly, if you have a gift card mall that has gift cards on the top and then you have side by
side a non-gift-card product, that would be subject to the regulation, Rinearson said.
The distinction requires issuers to be aggressive about product packaging, Kathryn Kling, a
payments attorney with Nelson Mullins Riley & Scarborough LLP in Washington, said in an interview
Monday.
It remains to be seen how this is all going to play out, Kling said, but issuers already have
started taking steps to scrap existing inventory that might earn a general-purpose card the gift
card moniker.
Some marketers have also been forced to eliminate cards that dont bear language reflecting new
expiration date rules.
Page 15 of 17
Green Dot Corp., a provider of network-branded prepaid products, has taken steps to ensure card
display racks it provides retailers are clearly labeled to prevent confusion, Steve Streit, the
chairman and chief executive, said in an interview Tuesday.
Most of our products were already marketed in a segregated fashion, Streit said.
The Monrovia, Calif., company also provides a Visa branded gift card that is sold at Wal-Mart
Stores Inc. and issued by General Electric Co.s GE Money unit.
Many hundreds of thousands of those cards have had to be destroyed and replaced to make sure they
meet expiration data and other requirements, Streit said.
He said the regulation has had less impact on Green Dot than on other prepaid card marketers. We
do know there are some companies out there that unfortunately have had to destroy many millions of
packages, he said.
If the gift cards include an expiration date, it must be at least five years after the date they
are issued or five years from the date that funds were last loaded on to them.
For example, gift card issuers must provide notice on a card that the funds may expire at a later
date than cards expiration date.
The disclosure must be made with equal prominence and in close proximity to the certificate or
card expiration date, the rules state.
Some companies have lobbied the Fed for an extension of when the rules take effect to handle
existing inventory, but so far such efforts have been unsuccessful, Rinearson said.
Its going to be this trailing long tail of the woes of expired cards, said Shawn Barrieau, the
chief executive of DimpleDough Inc.
The Independence, Ohio, company offers software that helps issuers customize the images on their
cards.
What were finding is sort of a pickup in demand for new card designs because of the regulations,
Barrieau said.
NetSpend Corp. a marketer of network-branded prepaid cards, has already begun working with our
distributors and educating them on the regulations and the impact they will have on in-store
marketing, Brad Russell, a spokesman for the Austin company, said by e-mail.
Packaging for NetSpends general purpose card is already compliant with these regulations, and
there will be no impact on our inventory that is currently in the field, Russell said.
Prepaid companies whose products do fall under the gift card category face new restrictions for the
fees they can charge.
The rules prohibit issuers from charging dormancy or inactivity fees unless a card has been
inactive for at least one year. If a card meets that threshold, an issuer cannot charge more than
one fee per month, whereas before an issuer could charge multiple fees per month.
Page 16 of 17
Additionally, if the card is used again after being inactive for a year, fees can not be charged
until it is inactive again.
For example, if a dormancy fee is imposed on January 1, following a year of inactivity, and a
consumer makes a balance inquiry on January 15, a balance inquiry fee may not be imposed at that
time because a dormancy fee was already imposed earlier that month, and a balance inquiry fee is a
type of service fee, the rules state.
The rules do not specify the amount card companies can charge, but restrict maintenance or service
fees, balance inquiry fees, ATM fees, point of sale fees and transaction fees charged for
reloading.
Nor do the rules prohibit initial activation fees or cash-out fees, and Rinearson said she
expects marketers to raise activation fees as a result.
Thats one of my complaints, she said. That means that everyone pays more for these cards up
front.
Top
The Daily News Brief is published exclusively for the Employees of TD Bank; please do not
distribute outside the company.
The information presented may contain forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 and comparable safe harbour provisions of
applicable Canadian legislation, including, but not limited to, statements relating to anticipated
financial and operating results, the companies plans, objectives, expectations and intentions,
cost savings and other statements, including words such as anticipate, believe, plan,
estimate, expect, intend, will, should, may, and other similar expressions. Such
statements are based upon the current beliefs and expectations of our management and involve a
number of significant risks and uncertainties. Actual results may differ materially from the
results anticipated in these forward-looking statements. The following factors, among others,
could cause or contribute to such material differences: the ability to obtain the approval of the
transaction by The South Financial Group, Inc. shareholders; the ability to realize the expected
synergies resulting from the transaction in the amounts or in the timeframe anticipated; the
ability to integrate The South Financial Group, Inc.s businesses into those of The
Toronto-Dominion Bank in a timely and cost-efficient manner; and the ability to obtain governmental
approvals of the transaction or to satisfy other conditions to the transaction on the proposed
terms and timeframe. Additional factors that could cause The Toronto-Dominion Banks and The South
Financial Group, Inc.s results to differ materially from those described in the forward-looking
statements can be found in the 2009 Annual Report on Form 40-F for The Toronto-Dominion Bank and
the 2009 Annual Report on Form 10-K of The South Financial Group, Inc. filed with the Securities
and Exchange Commission and available at the Securities and Exchange Commissions Internet site
(http://www.sec.gov).
The proposed merger transaction involving The Toronto-Dominion Bank and The South Financial Group,
Inc. will be submitted to The South Financial Group, Inc.s shareholders for their consideration.
Shareholders are encouraged to read the proxy statement/prospectus regarding the proposed
transaction when it becomes available because it will contain important information. Shareholders
will be able to obtain a free copy of the proxy statement/prospectus, as well as other filings
containing information about The Toronto-Dominion Bank and The South Financial Group, Inc., without
charge, at the SECs internet site (http://www.sec.gov). Copies of the proxy statement/prospectus
and the filings with the SEC that will be incorporated by reference in the proxy
statement/prospectus can also be obtained, when available, without charge, by directing a request
to The Toronto-Dominion Bank, 15th floor, 66 Wellington Street West, Toronto, ON M5K 1A2,
Attention: Investor Relations, 1-866-486-4826, or to The South Financial Group, Inc., Investor
Relations, 104 South Main Street Poinsett Plaza, 6th Floor, Greenville, South Carolina 29601,
1-888-592-3001.
The Toronto-Dominion Bank, The South Financial Group, Inc., their respective directors and
executive officers and other persons may be deemed to be participants in the solicitation of
proxies in respect of the proposed transaction. Information regarding The Toronto-Dominion Banks
directors and executive officers is available in its Annual Report on Form 40-F for the year ended
October 31, 2009, which was filed with the Securities and Exchange Commission on December 03, 2009,
and in its notice of annual meeting and proxy circular for its most recent annual meeting, which
was filed with the Securities and Exchange Commission on February 25, 2010. Information regarding
The South Financial Group, Inc.s directors and executive officers is available in The South
Financial Group, Inc.s proxy statement for its most recent annual meeting, which was filed with
the Securities and Exchange Commission on April 07, 2010. Other information regarding the
participants in the proxy solicitation and a description of their direct and indirect interests, by
security holdings or otherwise, will be contained in the proxy statement/prospectus and other
relevant materials to be filed with the SEC when they become available.
Page 17 of 17
THE FOLLOWING INFORMATION WAS SENT TO INVESTORS AND MADE AVAILABLE ON
THE INTERNET WEBSITE OF THE TORONTO-DOMINION BANK ON MAY 19, 2010
|
|
|
Q: |
|
Can you help me understand the loss projections on slide 11 (Loan Portfolio: Credit Losses)
of TDs Investor deck related to the acquisition of South Financial? |
|
|
|
A: |
|
Yes, based on questions received following the Investor Call, we agree that clarification
of the loss information on slide 11 would be helpful. The US$0.9 billion in charge-offs taken
from January 1, 2008 to March 31, 2010 relate to South Financials entire loan portfolio which
had a balance of US$10.2 billion as of the end of 2007. Of this amount, US$0.1 billion relates
to loans that continued to be part of the portfolio as of March 31, 2010. The percentage
included on slide 11 beside Loan Losses previously taken and Total Loan Losses Previously
Taken & Expected are not particularly meaningful as they are calculated based on the March
31, 2010 loan portfolio balance. |
|
|
|
Q: |
|
Will you get to use their deferred tax assets (DTAs)? |
|
|
|
A: |
|
The South Financial Group (TSFG) has a valuation allowance against 100% of their DTAs, as is
reflected in their 10K which is filed on www.sec.gov (Page 113, Note 17 (Income Taxes)). We
expect to be able to utilize a limited amount of their DTAs subject to various limitations,
including in Internal Revenue Code Section 382. |
1
Caution Regarding Forward-Looking Statements
From time to time, the Bank makes written and oral forward-looking statements, including in this
presentation, in other filings with Canadian regulators or the U.S. Securities and Exchange
Commission (SEC), and in other communications. In addition, representatives of the Bank may make
forward-looking statements orally to analysts, investors, the media and others. All such statements
are made pursuant to the safe harbour provisions of applicable Canadian and U.S. securities laws,
including the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements
include, among others, statements regarding the Banks objectives and priorities for 2010 and
beyond and strategies to achieve them, and the Banks anticipated financial performance.
Forward-looking statements are typically identified by words such as will, should, believe,
expect, anticipate, intend, estimate, plan, may and could.
By their very nature, these statements require the Bank to make assumptions and are subject to
inherent risks and uncertainties, general and specific. Especially in light of the uncertainty
related to the current financial, economic and regulatory environments, such risks and
uncertainties many of which are beyond the Banks control and the effects of which can be
difficult to predict may cause actual results to differ materially from the expectations
expressed in the forward-looking statements. Risk factors that could cause such differences
include: credit, market (including equity, commodity, foreign exchange and interest rate),
liquidity, operational, reputational, insurance, strategic, regulatory, legal and other risks, all
of which are discussed in the Managements Discussion and Analysis (MD&A) in the Banks 2009 Annual
Report. Additional risk factors include changes to and new interpretations of risk-based capital
guidelines and reporting instructions; increased funding costs for credit due to market illiquidity
and competition for funding; the failure of third parties to comply with their obligations to the
Bank or its affiliates relating to the care and control of information; the use of new technologies
in unprecedented ways to defraud the Bank or its customers and the organized efforts of
increasingly sophisticated parties who direct their attempts to defraud the Bank or its customers
through many channels; the ability to obtain the approval of the proposed transaction with The
South Financial Group, Inc. by its shareholders; the ability to realize the expected synergies
resulting from the transaction in the amounts or in the timeframe anticipated; the ability to
integrate The South Financial Group, Inc.s businesses into those of The Toronto-Dominion Bank in a
timely and cost-efficient manner; and the ability to obtain governmental approvals of the
transaction or to satisfy other conditions to the transaction on the proposed terms and timeframe.
We caution that the preceding list is not exhaustive of all possible risk factors and other factors
could also adversely affect the Banks results. For more detailed information, please see the Risk
Factors and Management section of the MD&A, starting on page 65 of the Banks 2009 Annual Report.
All such factors should be considered carefully, as well as other uncertainties and potential
events, and the inherent uncertainty of forward-looking statements, when making decisions with
respect to the Bank and undue reliance should not be placed on the Banks forward-looking
statements. Finally, there can be no assurance that the Bank will realize the anticipated benefits
related to the acquisition of the South Financial Group, Inc.
Material economic assumptions underlying the forward-looking statements contained in this
presentation are set out in the Banks 2009 Annual Report under the heading Economic Summary and
Outlook, as updated in the First Quarter 2010 Report to Shareholders; and for each of the business
segments, under the headings Business Outlook and Focus for 2010, as updated in the First Quarter
2010 Report to Shareholders under the headings Business Outlook.
Any forward-looking statements contained in this presentation represent the views of management
only as of the date hereof and are presented for the purpose of assisting the Banks shareholders
and analysts in understanding the Banks financial position, objectives and priorities and
anticipated financial performance as at and for the periods ended on the dates presented, and may
not be appropriate for other purposes. The Bank does not undertake to update any forward-looking
statements, whether written or oral, that may be made from time to time by or on its behalf, except
as required under applicable securities laws.
2
Additional Information
The proposed merger transaction involving The Toronto-Dominion Bank and The South Financial Group,
Inc. will be submitted to The South Financial Group, Inc.s shareholders for their consideration.
Shareholders are encouraged to read the proxy statement/prospectus regarding the proposed
transaction when it becomes available because it will contain important information. Shareholders
will be able to obtain a free copy of the proxy statement/prospectus, as well as other filings
containing information about The Toronto-Dominion Bank and The South Financial Group, Inc., without
charge, at the SECs internet site (http://www.sec.gov). Copies of the proxy statement/prospectus
and the filings with the SEC that will be incorporated by reference in the proxy
statement/prospectus can also be obtained, when available, without charge, by directing a request
to The Toronto-Dominion Bank, 15th floor, 66 Wellington Street West, Toronto, ON M5K 1A2,
Attention: Investor Relations, 1-866-486-4826, or to The South Financial Group, Inc., Investor
Relations, 104 South Main Street Poinsett Plaza, 6th Floor, Greenville, South Carolina 29601,
1-888-592-3001.
The Toronto-Dominion Bank, The South Financial Group, Inc., their respective directors and
executive officers and other persons may be deemed to be participants in the solicitation of
proxies in respect of the proposed transaction. Information regarding The Toronto-Dominion Banks
directors and executive officers is available in its Annual Report on Form 40-F for the year ended
October 31, 2009, which was filed with the Securities and Exchange Commission on December 03, 2009,
and in its notice of annual meeting and proxy circular for its most recent annual meeting, which
was filed with the Securities and Exchange Commission on February 25, 2010. Information regarding
The South Financial Group, Inc.s directors and executive officers is available in The South
Financial Group, Inc.s proxy statement for its most recent annual meeting, which was filed with
the Securities and Exchange Commission on April 07, 2010. Other information regarding the
participants in the proxy solicitation and a description of their direct and indirect interests, by
security holdings or otherwise, will be contained in the proxy statement/prospectus and other
relevant materials to be filed with the SEC when they become available.
3
THE FOLLOWING IS A COMMUNICATION SENT TO EMPLOYEES OF
THE TORONTO-DOMINION BANK ON MAY 19, 2010
1. TD in tight with Ottawa on bank tax The Globe and Mail (Streetwise blog)
Toronto-Dominion Banks decision to issue $250-million in common shares as it swallows another
troubled U.S. lender is a nod to the position that Canadas banking regulator and top government
officials are taking on the world stage, says CEO Ed Clark. Ed Clark quoted. See full story
2. Ottawa gives thumbs-down to bank tax CBC News
Canada launched a full-court press against the idea of a global bank tax Tuesday, as the prime
minister and four senior cabinet members came out strongly against a proposal thats gathering
global steam. Don Drummond quoted in this article, in addition to an editorial in Edmonton
Journal. See full story
3. Credit and debit card code of conduct widely adopted, Ottawa says Investment Executive (The
Canadian Press)
The federal finance minister says the Code of Conduct for the Credit and Debit Card Industry has
been widely adopted by the industry. See full story
4. South Financial buyer wants to be among top three in S.C. Charleston Regional Business Journal
(SC)
TD Bank Financial Group could look to buy other struggling banks in South Carolina after acquiring
The South Financial Group of Greenville. Fred Graziano (EVP and Head of retail banking, TD Bank)
quoted. Similar articles in Palm Beach Post (FL) and St. Petersburg Times (FL). See full story
5. Thomson Reuters tops Best Canadian Brands list Marketing magazine
Thomson Reuters has made its debut and taken the top spot on Interbrand Canadas Best Canadian
Brands 2010 study with a brand value of $9.4 billion. TD Canada Trust mentioned. See full story
6. A couple of things our political process is in need of CBC News
In the space of just eight days, three seemingly unconnected events showed, however briefly, how we
might properly govern our country. Two were Canadian, the other took place in Britain. Ed Clark and
Don Drummond mentioned. Written by Don Martin. See full story
7. Gays make strides in workplace; Pride at Work sees greater acceptance The Vancouver Sun (The
Windsor Star)
There was a time when Michael Bach, founding co-chairman of the organization Pride at Work, would
not have visited Windsor. TD Canada Trust mentioned. See full story
8. TD Bank paying kids for summer reading Queens Courier (NY)
With summer right around the corner, children are planning a variety of activities to keep
themselves entertained during the homework-free months. Biking, swimming, playing sports and video
games are all high up on their list. Reading . . . not so much. Elizabeth K. Warn (EVP, Community
Relations, TD Bank and President of the TD Bank Charitable Foundation) and Lauren Sullivan
(Corporate and Public Affairs, TD Bank) quoted. See full story
9. Show me the green National Post (online)
Saving the environment always takes a back seat to saving money during economic downturns despite
any lip service to the contrary. Indeed, 77% of Canadians who are willing to pay more for
environmentally friendly homes say that energy cost savings is a main motivation, according to a TD
Canada Trust poll in March, compared to 65% in 2008. Even the government has shut off the green
money tap, cutting off new bookings for its EcoEnergy Retrofit Homes program as of Mar. 31. Chris
Wisniewski (AVP, Real Estate and Secured Lending, TD Canada Trust) quoted; TD Friends of the
Environment Foundation mentioned. See full story
10. Bank Employee Claims Rothstein Ignorance South Florida Business Journal
A TD Bank employee said under oath Tuesday that she didnt notice any red flags or warning signs
for fraud about bank accounts of Ponzi schemer Scott Rothstein. Jennifer Kerstetter (Assistant
Store Manager, TD Bank) quoted; Roseanne Caretsky (Store Manager, TD Bank) mentioned. See full
story
11. Cougars arena name undecided The Post and Courier (Charleston, SC)
t remains to be seen whether or not the College of Charlestons Carolina First Arena will retain
its current name following the announcement that financially troubled Carolina First Bank is being
acquired by a Canadian financial group. TD mentioned. See full story
12. BMO program gives immigrants jump start The Toronto Star
The Bank of Montreal is launching a suite of banking products geared specifically to landed
immigrants that tries to ease their financial adjustment to Canada. See full story
13. J.P. Morgans Dimon To Keep Twin Roles The Wall Street Journal
J.P. Morgan Chase & Co.s James Dimon held on to the chairman and chief executive jobs despite a
shareholder proposal to split the roles at the nations biggest bank. See full story
14. Morgan Stanley Doesnt Know Of Any Criminal CDO Inquiry The Wall Street Journal
Morgan Stanley Chief Executive James Gorman said the investment bank isnt aware of any federal
criminal investigations related to the companys structuring and sale of collateralized-debt
obligations. See full story
15. Sovereign, M&T Talks Appear Dead The Wall Street Journal
Sovereign Bank and M&T Bank Corp. were in advanced merger discussions in recent weeks but the talks
are dead for now, people familiar with the matter said Tuesday. See full story
16. Valeurs mobilières: lIndustrielle Alliance entre dans la danse [Securities: Industrial
Alliance enters the dance] La Presse (The Canadian Press)
Le mouvement dopposition au projet fédéral de créer un organisme pancanadien de réglementation des
valeurs mobilières prend de lampleur: après la Financière Power et le Mouvement Desjardins,
lIndustrielle Alliance (T.IAG) a prôné mardi le maintien du système actuel. [The opposition to the
federal project to create a national securities regulator is growing: following Power Financial and
Desjardins, Industrial Alliance (IAG T.) on Tuesday advocated maintaining the current system .] See full story
17. Banks add fees to offset new rules; USA Today
Amid new limits on some of the industrys most profitable practices, banks are turning back to
familiar money-making strategies: annual credit card fees, monthly checking account fees and
product bundling. See full story
18. Credit card rules cut bank fees by $5B USA Today
New credit card and overdraft restrictions will save U.S. consumers from being charged at least $5
billion in fees this year alone at the largest U.S. retail banks and credit card companies, a USA
TODAY analysis reveals. See full story
19. Beware the coming credit card hit on Canadian families The Globe and Mail
MBNA Canada Bank mailed notices to credit card holders last week, notifying them that the countrys
No. 1 issuer of MasterCard will be changing the way it calculates minimum monthly payments. Other
card companies are doing the same, in accordance with new federal regulations aimed at greater
transparency for consumers. Column written by Neil Reynolds. See full story
20. Bank reform fears sink Wall St. National Post (Reuters)
Stock markets in the United States sank yesterday, driven lower as the strengthening of financial
regulation from Wall Street to Frankfurt crushed bank stocks, adding to worries about the
sustainability of the global economic recovery. See full story
21. Speculators targeted in new trading rules The Globe and Mail
U.S. and European regulators are taking steps to rein in the wild gyrations that have plagued
financial
markets. See full story
22. Life insurance: On the edge MoneySense
Howard Ublansky had no idea how much the simple task of taking out an insurance policy would change
his life. In 2002, the 37-year-old owner of a book distribution company purchased a house in
Thornhill, Ont., north of Toronto. As the familys main breadwinner, he applied for $500,000 in
mortgage life insurance to protect his wife and three young children if anything should happen to
him. In keeping with the standard insurance process, he underwent a medical exam and provided some
blood samples. No problem until Ublansky received a letter from the insurance company denying him
coverage. It turned out he had diabetes. I had no idea, he says. My wife was very upset. She was
saying, What am I going to do if you die? Im going to be out on the street. See full story
Looking for TDs view on articles about the bank or the financial industry? Visit TD News & Views
for background on some stories of the moment that may come up in your discussions with customers,
colleagues and friends.
Vous cherchez des opinions et des articles de la TD au sujet du secteur bancaire ou financier?
Visitez Nouvelles et Opinions de la TD pour y trouver de linformation sur certains sujets
dactualité qui peuvent être évoqués dans vos discussions avec des clients, des collègues et des
amis.
Full Stories
1. TD in tight with Ottawa on bank tax
The Globe and Mail (Streetwise blog)
05/19/2010
TARA PERKINS
Toronto-Dominion Banks decision to issue $250-million in common shares as it swallows another
troubled U.S. lender is a nod to the position that Canadas banking regulator and top government
officials are taking on the world stage, says CEO Ed Clark.
As Finance Minister Jim Flaherty and other Canadian politicians step up their campaign against a
new global bank tax, Mr. Clark suggested that TD is doing all it can to back them up.
The Canadian officials are pushing their international counterparts to support regulatory reform
for the banking sector, including higher capital requirements, to prevent a repeat of the financial
crisis. Essentially, the Canadian position is that banks around the world should be subject to
rules that look a whole lot like those that are already in place in this country. In discussions
with other G20 nations, Ottawa is proposing alternatives to both a bank tax and some of the more
draconian ideas that others are suggesting.
Mr. Clark says TDs decision to issue equity is a statement that we support the governments
position.
Canadas top banking regulator, Julie Dickson, has told financial institutions that she doesnt
want acquisitions to damage their capital levels and the Office of the Superintendent of Financial
Institutions expects them to issue equity to fund major deals.
Despite the $250-million that TD is issuing, its $192-million (U.S.) takeover of South
Carolina-based South Financial Group is still expected to dent its Tier 1 capital ratio by 40 to 50
basis points, taking it from 11.5 per cent to about 11 per cent, noted Canaccord Genuity analyst
Mario Mendonca.
While that leaves the bank very well capitalized (OSFI requires Tier 1 ratios to remain above a
bare minimum of 7 per cent), TD would have the lowest capital ratio of its Canadian peers, Mr.
Mendonca noted.
Return to Top
2. Ottawa gives thumbs-down to bank tax
CBC News
05/19/2010
Canada launched a full-court press against the idea of a global bank tax Tuesday, as the prime
minister and four senior cabinet members came out strongly against a proposal thats gathering
global steam.
Prime Minister Stephen Harper said a proposed international bank tax would unfairly penalize
well-regulated Canadian financial institutions that survived the global economic meltdown.
You cant tax an economy into prosperity; likewise you cant tax a financial sector into
stability, Harper said Tuesday.
The prime minister told a G8 and G20 youth forum on Parliament Hill that Canadas banks didnt have
to be bailed out during the global financial crisis and shouldnt be saddled with the proposed
levy.
They were not able to exploit some of the opportunities that got so many of these other Western
banks into trouble. Thats why we think it would obviously be unfair, Harper said Monday.
Toronto-Dominion Bank chief economist Don Drummond told CBC News he expects the bank tax proposal
will fail because it isnt logical.
We want banks in the United States and Europe in particular to hold more capital, he said. So
why would you want to tax them and take away the money that they could otherwise be putting towards
capital?
Instead of raising some bank tax, you should have a higher capital requirement than has prevailed
in those countries, he said.
Drummond also said that the creation of an emergency bailout fund might have the unintended
consequence of encouraging banks to take more risks, knowing they have the fallback of government
help.
Canada will host extraordinary back-to-back meetings of the G8 and G20 next month in Huntsville,
Ont., and Toronto. Harper said he will use his position as host to push the G20 to adopt a more
sustainable system of financial regulation as a corrective to the economic meltdown.
The bank tax was being pushed by European countries and had the backing of the Obama
administration. Harpers latest comments mark the start of a renewed push by his government to
derail the idea, which is also being opposed by some of the developing economies of the G20.
Five Conservative cabinet ministers echoed Harpers comments in four major cities on Tuesday that
will essentially trash the tax, while calling for stronger regulations for financial markets.
Let us be clear our government is opposed to a global bank tax, Foreign Affairs Minister
Lawrence Cannon told reporters in French. He was flanked by Industry Minister Tony Clement at an
event in Ottawa, reinforcing the idea of a united front.
Such a tax would reach into consumers pockets and punish our financial institutions, which have
taken
precautions, Clement added.
Our banks avoided toxic assets at every turn, Cannon said.
Finance Minister Jim Flaherty spoke to reporters in Mumbai, India, on Tuesday, reiterating his
opposition to a bank tax, but urging collaboration in finding a solution.
This debate has been a source of distraction from the main issue, Flaherty said.
G20 finance ministers made clear in their communiqué from Washington in April that the main issue
is the quality and quantity of capital, and a cap on leverage, Flaherty said.
So all this talk about a bank tax ... we need to focus on [the main issue] again and get it right.
He also said reports that Canada was standing alone in its opposition to the idea are not true, as
several other nations also have reservations about the bank tax plan .
The idea will not obtain the universal support that perhaps some thought it would obtain,
Flaherty said.
He also said he doubted that the upcoming G20 summit would bring resolution to the debate or see
any radical new ideas, as leaders have circled the end of 2010 to formally resolve the issue. I do
not anticipate new proposals, but I do expect more detail on existing ones, he said.
Treasury Board President Stockwell Day went even further, stressing Canadas opposition to any hard
tax on financial transactions.
Were very much opposed to the suggestion that banks should be taxed, he told reporters in
Shanghai.
Were worried that banks who had their act together be taxed, because the Canadian banking system
did not have to be bailed out.
* * * * *
Canadas bank tax alternative
Rather than a more formal tax on bank earnings, Canada has championed a plan it calls embedded
contingent capital as a way of strengthening the financial system and mitigating the need for bank
bailouts.
Essentially, the system would allow banks to sell bonds to pad their reserves, but the bonds would
automatically be converted to equity during bad times, thus avoiding the need for a taxpayer
bailout.
The system theoretically would encourage bondholders to keep a closer eye on management because
they would be unwillingly converted into shareholders if anything goes wrong.
Return to Top
3. Credit and debit card code of conduct widely adopted, Ottawa says
Investment Executive (The Canadian Press)
05/19/2010
The federal finance minister says the Code of Conduct for the Credit and Debit Card Industry has
been widely adopted by the industry.
Finance Minister Jim Flaherty says all the payment card networks, major credit and debit card
issuers and payment processors have adopted the code which will be effective starting Aug. 16.
Under the code, merchants will be given clear information regarding fees and rates and given
advance notice of any new fees and fee increases.
They will also be able to cancel contracts without penalty if fees rise or new fees be introduced.
Under legislation currently before Parliament, the mandate of the Financial Consumer Agency of
Canada will also be expanded to allow the agency to monitor compliance with the code.
Return to Top
4. South Financial buyer wants to be among top three in S.C.
Charleston Regional Business Journal (SC)
05/19/2010
SCOTT MILLER
TD Bank Financial Group could look to buy other struggling banks in South Carolina after acquiring
The South Financial Group of Greenville.
The Canadian bank already has been aggressive with its entrance in the Florida market, acquiring
four banks there in fewer than 60 days. That includes South Financials Florida subsidiary,
Mercantile Bank.
When we enter any market, our goal is always to be in the top three in deposit share and top three
in store count, said Fred Graziano, executive vice president and head of retail banking for TD
Bank.
That could be accomplished through acquisitions or branch construction, he said. Additionally, the
bank will keep longer hours than competitors, possibly remaining open seven days a week, to attract
customers, Graziano said.
TD Bank announced Monday that it agreed to purchase South Financial for about $192 million,
anticipating about $1 billion in future losses on the South Financial portfolio. If the acquisition
is approved by federal regulators and shareholders this summer, TD will add $9.8 billion in
deposits and pick up 176 branches: 83 in South Carolina, 66 in Florida and 27 in North Carolina.
To rank among the top three in South Carolina, TD Bank would need an additional $1 billion in
deposits and 30 more branches. The top three banks in South Carolina form 37% of the deposit market
share, according to figures from the Federal Deposit Insurance Corp.:
|
|
|
|
|
Bank
|
|
Deposits
|
|
Market Share |
Wachovia Bank
|
|
$11.46 billion
|
|
16.42% |
Bank of America
|
|
$ 8.08 billion
|
|
11.57% |
BB&T Corp.
|
|
$ 6.32 billion
|
|
9.06% |
With the South Financial acquisition, TD Bank ranks fifth in number of stores and fourth in
deposits with $5.5 billion, according to the banks analysis.
The bank ranks much lower in North Carolina, at 18th in number of branches and 21st in deposits.
There, TD Bank would need more than 250 additional branches and $30 billion in deposits.
TD Bank, or Toronto-Dominion, has the capital to fund growth in the Carolinas and sacrificed little
in acquiring South Financial, said Tony Plath, a banking professor at the University of North
Carolina at Charlotte.
TD bought South Financial without FDIC assistance for about $192 million. That includes $61 million
for shareholders and $130.6 million to purchase the $347 million in preferred shares that the U.S.
Treasury acquired as part of the Troubled Asset Relief Program.
It would be more expensive for Toronto-Dominion to take all of its employees to lunch at
Starbucks, Plath said. Lets face it: South Financial is a rounding error on their balance sheet.
They could do another 20 of these deals and not break a sweat.
TD Bank Financial Group has $567 billion in assets and 74,000 employees worldwide. It is the
sixth-largest bank in North America by branches and serves more than 18 million customers around
the globe.
Last month, TD Bank bought three shuttered Florida banks Riverside National Bank, First Federal
Bank of North Florida and AmericanFirst Bank for $3.8 billion from the FDIC.
I think TD will look to make others deals in the Carolinas and Georgia. Theyre going to go after
other weak, undercapitalized banks, Plath said. I think youll see them acquire a half dozen in
Georgia, North Carolina and South Carolina in the next two years. They want scale and they want
position in the market.
South Financial President and CEO Lynn Harton hinted as much when announcing the merger Monday.
Graziano said bank acquisitions are just one option.
Thats a strategy where, if something compelling comes along, we would do it, he said. If we
never get the opportunity to make an acquisition, thats OK. Well build out by finding sites and
building out a network.
TD Bank had been in negotiations with South Financial since December. Graziano wouldnt comment on
whether or not TD Bank has had similar discussions with other S.C. banks.
But like most banks, were always looking at opportunities, he said.
TD Bank still is evaluating specific markets within South Carolina for expansion, Graziano said.
Return to Top
5. Thomson Reuters tops Best Canadian Brands list
Marketing magazine
05/19/2010
KRISTIN LAIRD
Thomson Reuters has made its debut and taken the top spot on Interbrand Canadas Best Canadian
Brands 2010 study with a brand value of $9.4 billion.
The study, which is conducted every two years, describes the information company as a bold new
entrant to the rankings. Canadian publisher Thomson Corp. acquired Reuters for about US$17.2
billion in 2008, creating the worlds leading provider of news and data for professional markets.
The company has continued to drive success across its diversified portfolio of innovative products
and services for highly specialized customers, said the study.
The study rates brands by assigning them a dollar value based on analysis of future revenue, and
various
measurements of customer demand and influence.
In a release, Bev Tudhope, CEO of Interbrand Canada said The Thomson Reuters brand serves as a
model of how a Canadian enterprise can become a global powerhouse, and establish itself at the top
of its sector.
BlackBerry, which topped the list in 2008, fell to No. 4 with a brand value of $6 billion. TD
Canada Trust ($6.7 billion) and RBC ($6.2 billion) took the second and third spots respectively.
"TD and RBC have not only succeeded in the Canadian market, but have also attracted global
attention due to prudent business and risk management, enabling them to withstand the challenges of
the economic downturn, said Tudhope.
Also new to this years list are Bombardier, Imax and La Senza. Of the three, Montreal-based
Bombardier ranked the highest at No. 13 with a brand value of $1.7 billion.
As designer of this years Winter Olympics torch, Bombardier reinforced its leadership position in
engineering ingenuity, supplemented with a dose of Canadian spirit, said the study.
Imax stepped into the 24th spot with a brand value of $330 million, while La Senza took 25th place
with $282 million.
Notable movers: Tim Hortons and Lululemon. Tim Hortons went from 10th to sixth place with a brand
value of $2.6 billion, while Lululemon moved up five spots to 17 with a brand value of $827
million.
Manulife, which was new to the list in 2008, dropped from No. 6 to 12 with a brand value of $1.8
billion, while the lists other insurance brand SunLife Financial dropped one spot to 16 ($1
billion).
Bell held its position at No. 7 with a brand value of $2.5 billion, while Telus dropped one spot to
15 ($1.2 billion).
Return to Top
6. A couple of things our political process is in need of
CBC News
05/19/2010
DON MARTIN
In the space of just eight days, three seemingly unconnected events showed, however briefly, how we
might properly govern our country. Two were Canadian, the other took place in Britain.
Taken together, they show how mature grown-ups can face national issues and do something about
them. What I am talking about are:
|
|
|
The agreement in London to create a coalition government to last five years and tackle
the mammoth problems facing the U.K. |
|
|
|
|
The agreement in Ottawa to strike a special parliamentary committee to examine
classified government documents pertaining to Afghan detainees. |
|
|
|
|
And a retirement ceremony in Toronto to salute a bank economist who managed to push
forward a determined public policy agenda from what could have been a comfy Bay Street
perch. |
Why do these three disconnected events provide illumination on a way ahead for us Canadians?
Because they show that when faced with the facts and a certain amount of self-sacrifice, policy
makers can come put aside narrow self-interests and deal responsibly with the problems before them.
Britains coalition
With no fixed-date election law in Britain and the long-ruling Labour party on the ropes, the
temptation must have been great for Conservative Leader David Cameron, though perhaps also for the
Liberal Democrats Nick Clegg, to make a half-hearted attempt at minority government.
That would have only led to another election in the near future in which they could have really
picked over Labours bones.
Instead they created a de facto fixed election date by agreeing to work together for the next five
years on a common agenda.
In doing so, they delayed for a half a decade the prospect of either a standalone majority for the
Conservatives or increased seats for the Lib Dems.
Those are not unimportant sacrifices by partisan standards.
Meanwhile, in Ottawa (as in London), the deadline had to be extended but the overtime concessions
worked.
All four parties agreed to a process in which a select group of MPs will be able to look at the
full, unexpurgated documents dealing with Afghan prisoners and their transfer to local authorities.
This kind of co-operation, putting partisan interests aside, hasnt happened often in this era of
knife-edge minority governments.
But this time all the parties showed maturity and common sense in working out a deal that avoided
an election over an issue that was in no ones long-term interest.
Don Drummond
In Toronto, the retirement ceremony was to honour TD Canada Trust chief economist Don Drummond, who
is stepping out of that post in July after 10 years at the bank.
During that period, Drummond became a national figure with his frequent appearances on TV and in
other media to discuss the Canadian economy, world financial trends and all the other things upon
which bank economists are expected to opine.
At the same time, though, under his leadership, the banks forecasters began producing reports on
many of the big public policy issues that politicians are so often leery about addressing.
Subjects such as income disparity, global warming and how Canadian universities are performing.
Their reports on the growing disparity between top earners and those in lower echelons pointed out
how this trend is going to affect all Canadians, because of lower productivity and, therefore, a
shrinking competitive place in the world, which is not something that well-heeled investors
necessarily wanted to hear.
But Drummonds interest in these topics was long-standing, having evolved from his stint in the
federal Department of Finance, where he had risen to be associate deputy minister and was among the
top team that worked to get rid of Canadas massive deficit through the 1990s.
It no doubt helped him in his causes that the president of TD is Ed Clark, another, earlier migrant
from the federal civil service with a corresponding interest in public policy.
Still, not every member of the banks board or shareholder would have been thrilled by the
diversion of corporate resources to study national issues instead of just tax policy and interest
rate spreads.
And more than one must have wondered about the possible political fallout of raising controversial,
if important, issues in the face of a federal government that regulates Canadas chartered banks.
Frank and forthright
But Drummond and Clark stood their ground and TD has done very well, thank you very much. It is
hard to see that there has been any downside in being frank, forthright and accurate in discussing
the countrys future.
If only our politicians would do the same. While we are on the subject, there are three big issues
that deserve a full airing based on facts and not short-term political advantage or romantic
illusions.
I have mentioned them all in earlier columns but the list bears repeating:
|
|
|
The need to reorganize health care in the face of an aging population. |
|
|
|
|
The need to clean up oil sands production so Canadians can benefit fully from the
resource with as little environmental impact as possible. |
|
|
|
|
And our role in Afghanistan. |
We have lost six months since I first wrote about the need for a serious debate about our military
role there and the wisdom of the 2011 deadline for pulling out.
It was wrong for the Commons to approve extending the mission deadline until next year without
first making sure other NATO countries would join us in the dangerous southern region around
Kandahar.
But with the U.S. now pouring troops into the fight and asking us stay on a request that has
important ramifications for trade and access to Washington we should at least be trying to figure
out all the consequences of leaving, before we actually do so.
Each of these issues would take the kind of maturity and intelligence on display in London and in
the work of a Don Drummond.
We had a glimpse of it in Ottawa when it came to the fight over the detainee documents. Must that
be a one-off experience?
Return to Top
7. Gays make strides in workplace; Pride at Work sees greater acceptance
The Vancouver Sun (The Windsor Star)
05/19/2010
DALSON CHEN
There was a time when Michael Bach, founding co-chairman of the organization Pride at Work, would
not have visited Windsor.
I came out in 1986, and Ive seen a lot of homophobia in my life, Bach said.
But in the past 10 years even in the last five Ive been to places that in a previous life I
never wouldve gone.
Lethbridge, Calgary, Regina Windsor. At times, these wouldve been really
homophobic communities.
Things have really changed.
Bach was in the city on recently to speak at a business lunch about making workplaces more open and
inclusive for lesbian, gay, bisexual and transgendered people.
The event was organized by Windsor Pride as part of the events marking the International Day
Against Homophobia.
Neil Mens, executive director of Windsor Pride, said its an unfortunate fact about our community
that some LGBT individuals are still in the closet at their workplaces for fear that disclosure
of their orientation would hurt their careers.
For fear of discrimination and prejudice, Mens said. Over the years, they have sought to protect
themselves by being invisible.... At the present time, I think (those fears) are founded on truths
about Windsor-Essex.
But Mens added that Canada is overall further ahead in terms of equity legislation than other
places in the world, and he hopes people with homophobic views are becoming fewer and fewer.
Windsor Pride president Jason Patterson said that the event hosted at Willistead Manor was
Windsor Prides first official business luncheon.
Participating organizations included Scotiabank, TD Canada Trust, RBC, National Bank of Canada,
KPMG, and several Windsor-Essex service agencies.
Were doing well. We do have some work to do, but thats what were here for, Patterson said.
Scotiabank took the opportunity to present Windsor Pride with a $2,500 donation.
Patterson pointed to Scotiabank as an example of an inclusive employer, and noted that the banks
downtown branch has a diversity committee.
Along with heading Pride at Work, Bach is the national director of diversity for the tax and
auditing firm KPMG Canada.
Bach said he feels theres been amazing change in society.
Im here today. We have 75 people coming to hear us speak, he said.
People talk about sexual orientation ... its just part of the conversation now, and theres no
cowering away from it.
Told of homophobic comments that appear in online forums, such as the comment sections for
newspaper articles, Bach said that he believes in opening the conversation on sexual orientation,
even if it gives anonymous people a forum to vent irrational homophobic views.
I think shutting down dialogue is never a good thing, he said. Theres no easy balance on this
one. I think its important we accept that those comments are out there.
Bach recalled reading the online comments for a previous newspaper article hed appeared in.
Ill never read them again, because there were some really upsetting comments. But there were also
some really positive messages, where people were countering and saying No, its not OK to post
that... And I think if we dont have that dialogue, then people dont have opportunity to express
their positive opinions.
I think its important that the people who post negative comments understand that there are just
as many, if not more, who will post positive comments, Bach said.
Return to Top
8. TD Bank paying kids for summer reading
Queens Courier (NY)
05/19/2010
DESPINA KOUVAROS
With summer right around the corner, children are planning a variety of activities to keep
themselves entertained during the homework-free months. Biking, swimming, playing sports and video
games are all high up on their list. Reading . . . not so much.
According to the Center for Summer Learning, elementary school students lose more than two months
worth of reading performance each year during the summer. The Department of Education believes that
this literary gap will produce approximately 12 million unqualified workers within the next decade.
In an effort to motivate more children to read during the summer months, while simultaneously
teaching them a thing or two about savings, TD Bank has officially launched their eighth annual
Summer Reading Program, which started Monday, May 3 and lasts until Thursday, September 30.
The TD Charitable Foundation donated $56,000 to New York libraries, including the South Jamaica
Queens Library.
Now more than ever our children need resources and options to help them learn the importance of
savings so they are financially literate for years to come, said Elizabeth K. Warn, executive vice
president of community relations at TD Bank and president of the TD Bank Charitable Foundation.
The program, for students 18 years of age and younger, rewards those who read 10 books during the
summer with a $10 deposit to their TD Bank Young Savers Account.
According to Lauren Sullivan, TD Banks media relation specialist, About 10,000 to 15,000 children
have participated in the Summer Reading program the past few years and we have seen a rise in
participation.
All children have to do is fill out the summer reading form with all of the names of the books read
during the summer and bring it to the nearest TD Bank location in order to receive the $10 deposit.
The form is also available online at www.tdbank.com/summerreading.
TD Bank realizes the difficulty parents have when it comes to getting their children to read. In
hopes of making this process both easier, as well as fun, they offer a variety of tips on their
website, including: letting their child choose books that would interest them, reading the story
with them, asking them questions about the story and setting up a time for reading, making it a
scheduled activity.
Sullivan noted, At TD Bank, we believe that reading and financial literacy are key for future
education and economic success.
Return to Top
9. Show me the green
National Post (online)
05/19/2010
ANDY HOLLOWAY
Saving the environment always takes a back seat to saving money during economic downturns despite
any lip service to the contrary. Indeed, 77% of Canadians who are willing to pay more for
environmentally friendly homes say that energy cost savings is a main motivation, according to a TD
Canada Trust poll in March, compared to 65% in 2008. Even the government has shut off the green
money tap, cutting off new bookings for its EcoEnergy Retrofit Homes program as of Mar. 31.
That doesnt mean, however, that homebuyers cant get some green if they want to upgrade their new
or existing homes in an enviro-friendly way. For example, qualified borrowers can get a 10% refund
on their mortgage insurance from Canada Mortgage and Housing Corp. when they finance the purchase
or construction of an energy-efficient home or to help pay for energy-saving renovations.
Someone taking out a $250,000 mortgage with a 5% down payment gets a refund of about $690. Doesnt
sound like much, but since the program was started in 2005 CMHCs Green Home program has handed out
$3 million in refunds to more than 2,500 households. (Genworth Financial offers a similar program
and refunds any extended amortization insurance premium surcharge.)
The number of refunds processed has increased steadily year over year and it is anticipated that
this will continue to rise as CMHC continues to raise awareness of the rebate program, says CMHC
spokesperson Charles Sauriol.
For new homes to qualify for CMHCs program, they need a rating of 80 or Platinum as determined by
Built Green Canada, an industry-driven voluntary program that promotes green building practices.
Some of the major banks also offer programs that will refund a portion of an energy assessment
audit, and one, TD Canada Trust, has a specific green mortgage product that is similar to a
cash-back offer except the additional money isnt offered upfront and borrowers still get a
discount off the posted five-year rate, albeit only one percentage point.
TD rebates up to 1% (1.5% until June 30, 2010) of the amount of the mortgage or the fixed-rate
portion of a home equity line of credit when borrowers buy qualified Energy Star appliances or
CSA-approved solar panels. On a $200,000 mortgage, that means the rebate could be as high as $3,000
at the moment.
Chris Wisniewski, associate vice-president of real estate and secured lending atTD Canada Trust,
says the mortgage particularly helps first-time homebuyers price in the cost of new appliances as
well as those who dont have enough equity in their homes to borrow more but still want to buy
energy-saving equipment. Its a quick and easy way to get some additional funds, she says.
As part of the green mortgage offer, TD makes a $100 donation to TD Friends of the Environment
Foundation, a national organization that funds local groups dedicated to preserving the environment
through cleanups, conservation and recycling efforts.
TD also covers the cost of a residential efficiency assessment, which is necessary to qualify for
government rebates. While the federal government has stopped its program, there are provincial and
municipal programs that homeowners can take advantage of. Ontario, for example, will continue to
pay 50% (up to $150) of new pre-retrofit audits that help qualify homeowners for up to $5,000 in
retrofit grants. In British Columbia, homeowners are covered by LiveSmart BC: Efficiency Incentive
Program, which has similar grants.
TDs Green Home poll reported that 27% of Canadians have done a green home renovation or are
planning to do
so in the future the most popular upgrades were replacing regular light bulbs with
CFL light bulbs (53%) and replacing or upgrading windows. It also revealed that 66% of Canadians
would be more likely to make energy efficient upgrades if there were tax credits available to do
so, but that seems increasingly unlikely as cash-strapped government put the environment on the
back burner while they turn their attention to their deficits.
Return to Top
10. Bank Employee Claims Rothstein Ignorance
South Florida Business Journal
05/19/2010
PAUL BRINKMANN
A TD Bank employee said under oath Tuesday that she didnt notice any red flags or warning signs
for fraud about bank accounts of Ponzi schemer Scott Rothstein.
Thats despite hearing one of Rothsteins potential clients ask her if it was possible for bank
accounts with a zero balance to have money in them.
The deposition of Jennifer Kerstetter, an assistant branch manager, shed more light on how
Rothstein used local banks to further his fraud.
Kerstetter said she regularly printed account statements for Rothstein and his uncle, Bill
Boockvor. She said Boockvor regularly came into the banks office to retrieve paper printouts of
account statements, even though RRA had access to the same information on the Internet.
Later, some of those printouts wound up showing altered account balances. Kerstetter said several
printouts obtained from RRA or victims of the Ponzi scheme were obviously falsified, but she didnt
know who had altered the documents. One of the false account statements showed a $368 million
balance on March 20, 2009.
I would print out and e-mail how much he had in the bank, total, and it was never that high,
Kerstetter said.
The blond, ponytailed Kerstetter wore gold hoop earrings and a black jacket with a skirt for the
deposition, which was conducted by Theresa Van Vliet, an attorney with the Fort Lauderdale office
of Genovese Joblove & Battista. Van Vliet represents the trustee overseeing the RRA bankruptcy.
Kerstetter said Rothstein and the law firm enjoyed immediate deposit privileges, which allowed them
to make withdrawals on checks that were just entered into the account without the delays that were
customary on some accounts.
TD Bank itself has denied any knowledge of Rothsteins fraud and is defending itself against civil
allegations. The bank has said repeatedly that it believes facts will prove that the bank did not
conspire with Mr. Rothstein and/or his firm.
Kerstetter said shes worked for the bank for years, formerly with Commerce Bank in New Jersey,
before it was bought by TD Bank.
She testified that she received regular training about job duties, which included reviewing reports
on branch deposits, loans, significant balance changes, overdrafts and other operations.
On Oct. 15, just days before the Ponzi scheme was exposed, Kerstetter said she gave Boockvor an account
printout that showed a zero balance.
I showed him the printout. I said, Are you sure you want this one? It has zero dollars,
Kerstetter said. He said yes.
Later that day, Kerstetter said, she was directed to attend a meeting with several new investors
for the Ponzi scheme, including Dean Kretschmar. She was to help them open new TD Bank accounts.
She said Boockvor warned her beforehand: Watch what you say.
Did you wonder why he said that? Van Vliet asked.
I was kinda taken aback, Kerstetter said. Maybe he was just paranoid.
Kerstetter testified that her contact with Rothstein was limited over the years. But, she also said
one of the people at the Oct. 15 meeting assumed she knew Rothstein well, and she played along: I
didnt really know what to say. I said yeah.
Kerstetter said the new investors asked her if it was possible for an account where the balance
could say zero and not actually be zero.
Kerstetter said she thought about sweep accounts and said it might be possible. According to
Investopedia, a sweep account allows money above or below a certain balance to be automatically
transferred into higher interest-bearing accounts.
Finally, Kerstetter said one of the new investors asked her if the bank could guarantee that only a
certain person could use an account.
He asked me in such a way that I did not understand it at all, Kerstetter said.
Two additional TD Bank employees are expected to be deposed this week: Roseanne Caretsky, a branch
manager, and Frank Spinosa, a former senior VP.
Return to Top
11. Cougars arena name undecided
The Post and Courier (Charleston, SC)
05/19/2010
TOMMY BRASWELL
t remains to be seen whether or not the College of Charlestons Carolina First Arena will retain
its current name following the announcement that financially troubled Carolina First Bank is being
acquired by a Canadian financial group.
Its just too early to know, College of Charleston director of athletics Joe Hull said Tuesday.
Hull said staff members are looking at the $2 million naming rights agreement between the school
and the Greenville-based bank that was signed in 2005. The Post and Courier asked the school for a
copy of the contract Tuesday, but it refused to release the documents. The newspaper then filed a
request under the state Freedom of Information Act.
The South Financial Group Inc., Carolina Firsts parent company, has agreed to be acquired by TD
Bank
Financial Service for $61 million. The sale included the naming rights for Carolina First
Arena. The Toronto-based buyer also will pay $131 million to retire the governments investment in
South Financial.
The company received $347 million in federal bailout money under the U.S. Treasury Departments
Troubled Asset Relief Program.
In 2005, the $2 million naming rights agreement was the single largest gift the college had
received from a corporation and the most money Carolina First had donated at one time. When the
announcement was made, it guaranteed Carolina First would be on the building forever. The donation
was to be spread out over a decade, with the money going into an endowment fund. The $45 million
facility on Meeting Street, which seats 5,100, opened for the 2008-09 basketball season.
Return to Top
12. BMO program gives immigrants jump start
The Toronto Star
05/19/2010 11:14:05
Pg. B4
The Bank of Montreal is launching a suite of banking products geared specifically to landed
immigrants that tries to ease their financial adjustment to Canada.
The Newcomers to Canada program includes free banking for the first year, a free small
safety-deposit box for one year and a bonus rate on Guaranteed Investment Certificates.
The program, launched Wednesday, is available to all landed immigrants who have been in Canada for
up to three years.
Were trying to say, This is the foundation of what you need when you arrive, said Su McVey,
the banks vice-president of customer communications and marketing.
The package and the service are meant to help people quickly get acclimatized with the
fundamentals.
On the investment side, BMO will offer a 0.5 per cent interest rate bonus on GICs ranging from one
to five years.
The offer is good until Sept. 1, 2010.
A BMO Mastercard is also part of the newcomer package. Immigrants are often stymied by a lack of
Canadian credit history when they first arrive.
We know the importance of a credit card to someone who has just arrived, said Srini Iyengar, a
director of multicultural markets at BMO . We make sure we have credit policies that address the
newcomer and help them to get the card.
For instance, the bank may give more weight to net worth or past employment rather than relying
solely on current employment, Iyengar said.
Bank staff typically field a range of inquiries from newcomers, Iyengar said, ranging from how to
apply for health cards and social insurance numbers to the quality of neighbourhoods and schools.
BMO has made it a priority to offer service in multiple languages at its branches. Our managers
have to go above
and beyond the regular financial duties and that builds loyalty and good will,
Iyengar said. We make sure that we have staff with the proper skills and we keep them up to date.
BMO is the only Canadian bank with branches in Beijing, Shanghai, Guangzhou and Hong Kong.
According to Citizenship and Immigration Canada , there were nearly 250,000 immigrants to Canada in
2008. In Toronto and Vancouver alone, there were approximately 87,000 and 37,500 immigrants,
respectively.
Return to Top
13. J.P. Morgans Dimon To Keep Twin Roles
The Wall Street Journal
05/19/2010
MARSHALL ECKBLAD
Pg. C3
J.P. Morgan Chase & Co.s James Dimon held on to the chairman and chief executive jobs despite a
shareholder proposal to split the roles at the nations biggest bank.
Shareholders rejected the recommendation during the banks annual meeting, which clocked in at a
little more than three hours. The proposal backed by the California Public Employees Retirement
System, or Calpers was supported by 33.9% of J.P. Morgan Chases shareholders.
The meeting, attended by more than 400 shareholders and bank executives, was free of controversial
votes despite criticism from shareholders of the banks lending practices and its disclosure of
derivatives and a volley of comments about the performance of Mr. Dimon.
Outside One Chase Manhattan Plaza in downtown Manhattan, about 300 protesters gathered to call
attention to what they say are bad mortgage practices at the bank. Dozens of police officers were
also at the scene.
Mr. Dimon reaffirmed that he believes the bank will eventually raise its dividend to pay out 30% to
40% of earnings. He said the decision to raise the dividend depends on an improvement in the U.S.
unemployment rate, an improvement in the ability of consumers to meet their debt payments and
decisions from regulators about how much capital banks should have.
J.P. Morgan currently pays out 6.14% of its earnings in dividends, according to Morningstar Inc.
The bank joined others in cutting its dividend during the financial crisis to conserve capital.
With the U.S. economy showing signs of improving, investors have been listening closely for
indications of when banks will raise their dividends.
J..P. Morgan Chase shares fell 82 cents, or 2.1%, to $39.02 in 4 p.m. composite trading on the New
York Stock Exchange, amid a broader drop in financial stocks. They are down 6.4% for the year to
date.
Return to Top
14. Morgan Stanley Doesnt Know Of Any Criminal CDO Inquiry
The Wall Street Journal
05/19/2010
BRETT PHILBIN and AARON LUCCHETTI
Pg. C5
Morgan Stanley Chief Executive James Gorman said the investment bank isnt aware of any federal
criminal investigations related to the companys structuring and sale of collateralized-debt
obligations.
Speaking to reporters after Morgan Stanleys annual meeting of shareholders, Mr. Gorman said, We
have not received any notification that there exists a probe or that Morgan Stanley is the focus
of an investigation.
Mr. Gorman declined to elaborate and instead invoked Bruce Springsteen, saying, I dont believe in
dancing in the dark.
Rival Goldman Sachs Group Inc. has been sued for civil fraud by the Securities and Exchange
Commission. The Wall Street Journal has reported that federal prosecutors are conducting a
preliminary criminal probe of several Wall Street firms, including Morgan Stanley and Goldman, to
determine whether they misled investors about their roles in mortgage-bond deals.
Mr. Gorman, at his first annual meeting since taking on the CEO role, let Chairman John Mack answer
most questions.
Shareholders approved two proposals related to Morgan Stanleys compensation. A nonbinding advisory
vote approved executive-compensation practices. The second proposal, an amendment to the companys
2007 equity-incentive plan, allows Morgan Stanley to issue 38 million more common shares to
employees.
Also, Mr. Gorman said Morgan Stanley was committed to regulatory reform, and most derivatives
should be cleared centrally, while Mr. Mack defended Morgans lobbying.
Return to Top
15. Sovereign, M&T Talks Appear Dead
The Wall Street Journal
05/19/2010
DENNIS K. BERMAN and CARRICK MOLLENKAMP
Pg. C5
Sovereign Bank and M&T Bank Corp. were in advanced merger discussions in recent weeks but the talks
are dead for now, people familiar with the matter said Tuesday.
The deal would have catapulted Sovereigns owner Spains Banco Santander SA into the
upper-ranks of U.S. banking, at a time when many European banks are seen as too weak to make big
acquisitions.
Even with troubles in the euro-zone economies, Santander is eager to push into the U.S. market,
using Sovereign as a base for expansion.
M&T has remained independent amid vast consolidation of the regional-banking market. The bank has a
market capitalization of $10.4 billion.
A 22.5% stake in the bank has recently been put into play, after M&Ts largest shareholder
Allied Irish Banks PLC announced plans to divest the holdings to shore up its own flagging
capital base.
The plan under discussion involved M&T buying Sovereign from Santander, said one person familiar
with the discussions. Santander would then get a stake in the newly merged M&T, this person said.
The next step involved Santander purchasing the AIB stake, this person said.
Talks were active in recent weeks, but have since fallen apart. M&T grew skeptical of the
combination, said people familiar with the matter. They added that the talks arent ongoing, for
now. One potential outcome is that the AIB stake could be sold on the open market,
Despite the housing downturn in Spain, Santander has been seen as a strong survivor of Europes
leading banks. The recent deal talks show it still has has robust intentions for the U.S. market.
Return to Top
16. Valeurs mobilières: lIndustrielle Alliance entre dans la danse [Securities: Industrial Alliance enters the
dance]
La Presse (The Canadian Press)
05/19/2010
SYLVAIN LAROCQUE
Le mouvement dopposition au projet fédéral de créer un organisme pancanadien de réglementation des
valeurs mobilières prend de lampleur: après la Financière Power et le Mouvement Desjardins,
lIndustrielle Alliance (T.IAG) a prôné mardi le maintien du système actuel.
Parmi les grands joueurs de lindustrie financière québécoise, il ne reste plus que la Banque
Nationale et la Banque Laurentienne à ne pas contester les intentions du gouvernement de Stephen
Harper.
Dans un communiqué publié jeudi, lIndustrielle Alliance soutient que «le secteur canadien des
services financiers est bien servi par lencadrement réglementaire actuel, y compris par lAutorité
des marchés financiers (AMF)».
Ce dont lindustrie «a le plus besoin actuellement», cest dune «meilleure application de la
réglementation en ce qui a trait aux crimes économiques», a ajouté lassureur de Québec, en
rappelant le «rôle important» quOttawa doit jouer «pour rendre lencadrement financier encore plus
dissuasif».
La priorité actuelle ne devrait donc pas être de «modifier les structures», mais d«améliorer les
lois» et de consacrer «plus de ressources» aux enquêtes sur les crimes économiques, a plaidé le
président et chef de la direction de lIndustrielle Alliance, Yvon Charest.
La semaine dernière, la Financière Power et le Mouvement Desjardins sont sortis de leur mutisme
pour demander à Ottawa de tenir compte de la position du gouvernement du Québec, qui soppose
farouchement à un organisme pancanadien.
Les assureurs La Capitale et SSQ, le Fonds de solidarité FTQ, Fondaction ainsi que la Caisse de
dépôt et placement sont toutefois les seules organisations du secteur financier qui ont accepté de
faire partie de la coalition contre le projet fédéral, mise en place par Québec.
Return to Top
17. Banks add fees to offset new rules;
USA Today
05/19/2010
KATHY CHU
Pg. 3B
Amid new limits on some of the industrys most profitable practices, banks are turning back to
familiar money-making strategies: annual credit card fees, monthly checking account fees and
product bundling.
The developments are part of a new era of consumer banking, analysts say, one with more fees but
also, more safety nets and disclosures for consumers.
As measures take effect this year to overhaul credit card and overdraft practices, What youre
essentially doing is squeezing the balloon, (so fees) are going to pop up somewhere else, says
Bart Narter, senior vice president at Celent, a bank research and consulting firm. Yet, ongoing
regulatory scrutiny means that new fees rolled out by the industry will generally be more fair,
and unlike overdraft charges, wont disproportionately affect the poorest consumers, Narter says.
Some banks are already taking steps that could lessen the blow of the regulations. TCF Financial,
based in Wayzata, Minn., has eliminated free checking accounts. (TCF customers can still avoid
fees, though, if they have direct deposit or meet balance requirements.) Narter, in a recent Celent
report, notes that overdraft fees are the engine that pulls along free checking, so with less fee
income, banks will have to consider changes to their business practices.
Meanwhile, Fifth Third Bank has started bundling identity-theft protection services with its
checking account and charging a monthly fee of $7.50. And Bank of America has launched a product
that packages together a business and a personal checking account, which Celent believes will
drive profitable accounts.
Making up for the impact
Neil Cotty, BofAs chief accounting officer, said on a recent analysts call that the bank will
look to mitigate the impact of overdraft restrictions, which could cost it roughly $1 billion in
2010.
You should expect that customers will have a choice of banking more efficiently, bringing more
relationships to us or paying a maintenance fee, he said.
On the credit card side, BofA is imposing annual fees of $29 to $99 on a small percentage of
accounts, bank spokeswoman Anne Pace says, to see how much customers value their cards. Citigroup
is charging a $60 yearly credit card fee due to increased business costs, but will credit that fee
back if customers charge $2,400 on the credit card within 12 months.
Leslie Parrish, a senior researcher at the Center for Responsible Lending, an advocacy group, says
that while its always an area of concern to see banks charging more, when banks have to disclose
the prices upfront, its a good thing for consumers.
Advocates warn that without an independent consumer protection bureau, a proposal championed by
Senate Banking Committee Chairman Christopher Dodd, D-Conn., banks could
find ways to get around the rules when Congress appetite for reform wanes. They say that despite
changes to industry practices, consumers still have to be on guard against aggressive bank fees.
Gail Hillebrand at Consumers Union says that while the Federal Reserve rules clamp down on debit
card overdrafts, they dont prevent banks from paying overdrawn checks and charging a hefty fee.
(Banks contend that consumers want this service because if the check bounces, they could face
merchant and bank fees.) Banks are also still allowed to clear transactions from highest to lowest
dollar amount, emptying the account more quickly and triggering more overdraft fees.
Slipping through a loophole?
Additionally, the credit card law created a loophole that Hillebrand says the Federal Reserve has
yet to address.
The law requires banks that raise consumers rates to a penalty interest rate
because of a 60-day late payment to lower it if the first six consecutive payments are made on
time. The problem is that, If youve just had an economic emergency, you may not be able to pay
the first payment on time, notes Hillebrand, adding that consumers should get their rates lowered
after any six consecutive on-time payments.
Ultimately, consumers rather than issuers may bear the heaviest burden from the credit card
law, contrary to its intent, says Sanjay Sakhrani, an analyst at Keefe Bruyette & Woods. Thats
because some consumers will no longer be able to get credit. Also, many issuers raised consumers
credit card interest rates before the law took effect, Sakhrani notes.
By law, banks are required to review the accounts of consumers who had their rates raised since
January 2009 and to lower the rate if indicated. But under the Feds proposed rule, banks have
ample leeway over whether to actually do so.
Jim Brush, the co-owner of Key West Key Lime Pie, in Big Pine Key, Fla., says the governments
crackdown on bank fees wont reverse the damage already done. In the past year, Brush has closed
six of his nine credit card accounts after banks repeatedly lowered his card limits to just above
his balance and raised his interest rates despite his on-time payment record. He still has three
credit cards with American Express, he says, because thats the only company that didnt lower his
limit or raise his rates.
Even though the government put these restrictions in place to try to protect consumers, as weve
seen, the banks and credit card companies have always found ways around them, says Brush. I just
dont feel safe with banks anymore.
*Rules save consumers money, 1B
List
New credit card laws affect banks
A new credit card law will cost the banking industry billions of dollars in fees this year. The
expected 2010 impact:
Company Impact
Bank of America $900 million
JPMorgan Chase $500 million to $750 million
Citigroup $400 million to $600 million1
Wells Fargo $235 million
HSBC North America $200 million to $300 million
Barclays Group US $179.8 million2
U.S. Bancorp $100 million
1 after repricing actions; 2 USA TODAYs 2010 estimate, in U.S. dollars, based on Barclays
estimate of a first quarter impact of 30 million U.K. pounds Sources: USA TODAY analysis, SNL
Financial, bank projections
Expected effect of restrictions
Banks will have to give up billions more in fees when overdraft restrictions take effect this
summer. The expected 2010 impact :
Company Impact1
Bank of America about $1 billion
JPMorgan Chase $500 million2
Wells Fargo$500 million
U.S. Bancorp$200 million to $300 million
PNC Financial Services Grp.$115 million
Capital One Financial about $86 million3
SunTrust Banks$40 million to $80 million
1 due to Federal Reserve restrictions, and in some cases, banks own changes; 2 annually, not
all changes in effect for 2010; 3 USA TODAY estimate based on banks disclosures; Sources: USA
TODAY research, SNL Financial, bank projections
Return to Top
18. Credit card rules cut bank fees by $5B
USA Today
05/19/2010
KATHY CHU
Pg. 1B
New credit card and overdraft restrictions will save U.S. consumers from being charged at least $5
billion in fees this year alone at the largest U.S. retail banks and credit card companies, a USA
TODAY analysis reveals.
The analysis based on institutions own estimates comes during a year when new rules are
kicking in to address unfair credit card rate increases and steep bank overdraft fees. It
highlights the sizable dent these rules will have on an industry blamed for pushing consumers
deeper into distress during the recession.
In recent years, banks made it easier for consumers to overdraw their bank accounts and raised
credit card fees and rates. As consumer outcry swelled in the recession, Congress passed a credit
card law and the Federal Reserve issued a regulation to crack down on banks aggressive overdraft
policies on debit cards.
Lawmakers hope the restrictions will mean much-needed savings for consumers, boosting spending and
the economy. Indeed, new data show the measures are their own little stimulus for the economy,
keeping billions in the pockets of consumers rather than in profits gained from deceptive
practices, says Rep. Carolyn Maloney, D-N.Y., co-author of card reform signed into law last year.
USA TODAYs analysis relies on institutions projections of what they will give up under the new
rules, gathering data from the 10 largest retail depository institutions and the 10 largest holders
of credit card receivables, as
tracked by SNL Financial.
Of the 10 institutions with the largest amount of credit card receivables, seven gave estimates
about the credit card laws impact. In all, the issuers Citigroup, Bank of America, JPMorgan
Chase, Wells Fargo, U.S. Bancorp, HSBC North America and Barclays Group US will forgo at least
$2.5 billion to $3.1 billion in fees just in 2010. Also, seven of the top 10 depositary
institutions expect to take a combined $2.4 to $2.6 billion hit under the new overdraft rules and
banks voluntary policy changes.
R.K. Hammer Investment Bankers predicts that institutions will give up at least $9.9 billion in
revenue a year due to the credit card law. Moebs Services estimates that the industrys overdraft
revenue will shrink by $1.9 billion, to $35.2 billion this year. While some institutions are moving
away from overdraft coverage, others are boosting fee income with new programs, Moebs says.
Scott Talbott, a senior vice president at the Financial Services Roundtable, warns that the total
cost of the credit card and overdraft regulations will be even higher than bank estimates, which
dont take into account the loss of services and credit that would be available.
Return to Top
19. Beware the coming credit card hit on Canadian families
The Globe and Mail
05/19/2010
NEIL REYNOLDS
Pg. B2
MBNA Canada Bank mailed notices to credit card holders last week, notifying them that the countrys
No. 1 issuer of MasterCard will be changing the way it calculates minimum monthly
payments. Other card companies are doing the same, in accordance with new federal regulations aimed
at greater transparency for consumers.
As an example, MBNA cited an account balance that would have required a minimum payment of $185 in
the past; as of August, that required payment will rise to $307, an increase of 66 per cent. A
higher payment would reduce interest costs, MBNA noted, adding that it would also help you pay off
your balance faster.
We now have detected yet another coughing canary in the exemplary Canadian coal mine. Exploiting
low interest rates, Canadian households have taken on record personal debt ($1.4-trillion) more
than doubling it in the past decade to now equalling more than $40,000 for every man, woman and
child in the country. This is the highest household debt in 20 of the most advanced economies of
the Western democracies. More ominously, however inevitably, the number of Canadian households
filing for bankruptcy (or taking alternative emergency measures) has also set a record. By years
end 2009, more than 150,000 families were economic wrecks (up by 30,000 families from years end
2008).
Household debt includes mortgages, bank loans and credit cards. On the countrys huge increase in
mortgage debt, the relevant experts are divided: On one hand, homeowners are apparently comfortable
with it; on the other hand, Bank of Canada Governor Mark Carney not so much. As always, time will
tell.
Credit card debt is another matter altogether. The number of credit cards written off as bad loans
- on an industry-wide basis fell marginally in April (from 6.9 per cent to 6.8 per cent). The
optimism generated by this modest good news was, as Report on Businesss Andrew Willis noted last
week, a factor in the Royal Bank of Canadas off-loading of $1.2-billion in credit card debt to
presumably astute investors.
But according to Deloitte Canada, in an April report, the credit card industry has averted calamity
by the skin of its teeth. The industry, the accounting company said, has been transformed from one
of the most profitable areas of
lending to one of the least.
The industrys narrow escape, Deloitte said, means that things will have to change from strategic
revision of business practices and operating models to exits, by some companies, from the
business. Deloitte attributed the crisis to a perfect storm of causes: record net losses driven
by increased debt and rising consumer bankruptcies, [which have] occurred at a time of increased
government regulation.
Canadians hold 72 million credit cards and 37 million debit cards. Credit card debt stands at
$72-billion. How are card holders doing in making their minimum monthly payment? From years end
2008 through years end 2009, the number of delinquent credit card holders (with payments in
arrears by 90 days) increased by 50 per cent. These tardy card holders wont all default, of
course; but, assuming that MBNAs higher-payments strategy extends through the industry, more of
them certainly would. On the margin and millions of Canadians live close to it people who have
trouble with a payment of $185 will have more trouble with a payment of $307.
It isnt only consumers with accumulated credit card debt who need to take note of credit card
companies move away from the traditional easy-money approach to unsecured lending. Mr. Carney
might take note, too. Higher monthly credit card payments are the economic equivalent of a brokers
higher margin requirements. It is an economic tightening that puts a brake on economic
transactions. From Mr. Carneys perspective, its another stubborn signal of deflation, because
its inherently deflationary to curtail lending.
Banks make money in two ways: by charging fees and by collecting interest. In its letter to card
holders, MBNA notes that the raising of the minimum monthly payment would decrease the amount of
interest it collects. The manoeuvre is also defensive; in effect, it shifts the risk from itself to
its customers.
Theres more of this sort of thing to come in the next few months. In July, Ontario and British
Columbia introduce a wide range of (HST) tax increases that must be paid, at point of purchase,
from peoples disposable personal incomes. Other provinces are raising a range of other taxes. As
the conservative think tank Fraser Institute noted last month, the average Canadian household
already pays more in taxes than it pays for food, clothing and housing combined. Alas, the Canadian
household or, at least, the Canadian private sector, working-class household is pretty much a
spent force.
Return to Top
20. Bank reform fears sink Wall St.
National Post (Reuters)
05/19/2010
Pg. FP11
Stock markets in the United States sank yesterday, driven lower as the strengthening of financial
regulation from Wall Street to Frankfurt crushed bank stocks, adding to worries about the
sustainability of the global economic recovery.
In Washington, several Republicans will vote with Democrats to wrap up debate on the reform of
financial regulations and move toward final passage, Senate Majority Leader Harry Reid said.
Officials in Germany added to the uncertain future for banks when they suddenly moved to ban naked
short selling in the stocks of the countrys 10 most important financial institutions. Naked short
selling occurs when an investor sells shares without borrowing them first.
The euro hit a four-year low following the news and amid ongoing worries that deep cuts to
government budgets will dampen euro-zone growth.
Goldman Sachs added to the negative tone when it said the financial reform bills changes could
shrink banks normalized earnings per share by 20%.
The Dow Jones industrial average fell 114.88 points, or 1.1%, to 10,510.95. The S&P 500 lost 16.14
points, or 1.4%, to 1120.80. The Nasdaq Composite Index shed 36.97 points, or 1.6%, to 2317.26.
A strong move on the upside came after the closing bell, though, when Hewlett-Packard Co. reported
results that beat expectations on good demand for personal computers and servers, and the company
raised its full-year earnings outlook. HPs stock rose 2.5% to US$47.97 in extended trade. During
regular trading, the stock had dropped 1.6% to close at US$46.78.
Return to Top
21. Speculators targeted in new trading rules
The Globe and Mail
05/19/2010
BARRIE McKENNA
Pg. B1
U.S. and European regulators are taking steps to rein in the wild gyrations that have plagued
financial markets.
German financial regulators announced a 14-month ban Tuesday on naked short sales of some euro zone
debt and credit default swaps speculative trades that some critics blame for worsening the
European debt crisis.
Typically, traders must borrow securities to short them, or bet their value will fall. In a naked
short sale, traders exploit market anomalies to short stocks they dont actually own.
The German move, which analysts said could be matched by other European countries, helped fuel
another drop in the euro and a selloff on North American and European stock markets.
The unusual intervention seems designed to assuage political concerns that unregulated speculative
attacks have dramatically escalated the debt crisis and undermined the euro. But the ban may not
have much actual impact on the speculators, the rising volatility in the markets or the faltering
single currency.
The bulk of the European short-selling activity that has drawn the ire of policy makers occurs in
London, which is beyond the reach of euro zone regulators. And so far its main effect has been to
prompt further jitters among bond investors about the risks of holding euro zone debt.
The German action comes as U.S. regulators move to impose emergency curbs to prevent a repeat of
the mysterious May 6 flash crash that wiped out more than $1-trillion (U.S.) in stock market
value in minutes.
Under a proposed rule change filed Tuesday by the U.S. Securities and Exchange Commission, stock
exchanges would briefly suspend trading in shares that have unusually wild movements. The plan is
slated to go into effect in mid-June as part of a six-month test to gauge its impact on investors.
We continue to believe that the market disruption of May 6 was exacerbated by disparate trading
rules and conventions across the exchanges, SEC chairman Mary Schapiro said in a statement. As
such, I believe it is important that all the exchanges quickly reached consensus on a set of
uniform circuit breakers that would be triggered when needed.
Regulators and stock market officials are eager to shore up confidence in U.S markets after the May
6 incident,
which briefly sent the Dow Jones industrial average cascading nearly 1,000 points.
Trading of any Standard & Poors 500 stock that rises or falls 10 per cent or more would be halted
for five minutes. These rules, known as circuit breakers, would be applied if the price swing
occurs between 9:45 a.m. and 3:35 p.m., or nearly the length of the trading day.
Ms. Schapiro said her agency is looking at a number of issues we think can be remediated quickly
even before we understand necessarily what the exact cause of the crash was.
The new breakers will act as speed bumps to help the market adjust quickly to the high levels of
volatility, Ms. Schapiro told attendees at a conference in Boston by video link from Washington.
Regulators are also looking at trading curbs to halt sudden movements across multiple stock
markets. This would give investors time to digest market-moving news and adjust their trading
strategies. There are already broad index-based breakers in place, but those were not tripped when
the market shot down and then recouped some of its losses in less than 20 minutes that afternoon.
Regulators are still trying to piece together exactly what happened May 6. The worst of the mayhem
lasted barely 10 minutes, but sent the Dow plunging nearly 10 per cent. Trading reached 19 billion
shares.
There is still a great deal of work to do and a great deal of information to be reviewed,
Commodity Futures Trading Commission chairman Gary Gensler told reporters Tuesday. A joint SEC and
CFTC advisory committee is to review the findings at its first meeting Thursday in Washington.
Canadian market regulators said Tuesday they had not seen any details of the U.S. proposal and
could not comment on a possible Canadian response.
Last week, Canadian regulators announced an investigation into unusual trading during the May 6
market plunge, and said they plan to address inconsistent rules for freezing trading on stock
exchanges during periods of wild volatility.
But its unclear whether the review would have to be accelerated in light of U.S. reforms to ensure
the two integrated markets have similar circuit breakers in place in the event of another market
plunge.
Some stock market officials have traced some of the unusual trading to Waddell & Reed, a
Kansas-based mutual fund. In a statement earlier this week, the company said it was among the firms
that traded the stock index futures contract suspected of being a crucial link in the cascade of
events leading up to the plunge.
Waddell & Reed confirmed that it executed several trading strategies, including index futures
contracts, as part of the normal operation of its funds. Like many market participants, Waddell &
Reed was affected negatively by the market activity of May 6, the company said.
Return to Top
22. Life insurance: On the edge
MoneySense
05/19/2010
DAN BORTOLOTTI
Howard Ublansky had no idea how much the simple task of taking out an insurance policy would change
his life. In 2002, the 37-year-old owner of a book distribution company purchased a house in
Thornhill, Ont., north of
Toronto. As the familys main breadwinner, he applied for $500,000 in
mortgage life insurance to protect his wife and three young children if anything should happen to
him. In keeping with the standard insurance process, he underwent a medical exam and provided some
blood samples. No problem until Ublansky received a letter from the insurance company
denying him coverage. It turned out he had diabetes. I had no idea, he says. My wife was very
upset. She was saying, What am I going to do if you die? Im going to be out on the street.
Paul Knapp got a similar shock early in 2007. The 41-year-old wanted half a million dollars in life
insurance to supplement the group coverage he gets through his employer, a downtown Toronto law
firm. Knapp has an 11-year-old daughter who has lifelong special needs and I wanted to make sure
that there were funds available in the future should I not be on the scene anymore, he says. But
Knapp flies planes for a hobby. That had a dramatic effect on the premiums, he says. His quotes
were at least double the standard rates, and one was almost triple. Knapp was left debating whether
he was willing to give up the flying hobby he loved to get the insurance he needed.
Such situations are more common than you may realize. About one in 10 people who apply for life
insurance are deemed to be higher than normal risk because of a medical condition or lifestyle
choice. What can you do if you find yourself, like Ublansky and Knapp, being declined for coverage
or quoted rates you cant afford?
It helps to learn how life insurance works. Unlike property insurers, who can always raise your
rates after you file a claim or two, life insurers are locked into whatever rate they quote you
when you take out a policy. If you develop cancer six months after signing up for a 20-year term
policy, your premiums for the rest of the term dont go up after the diagnosis. The insurer is on
the hook, and thus the insurer tends to be very cautious when you first apply for a policy.
Life insurers begin by asking your age, your sex, and whether or not you smoke. They use this
information as a first step to determining whether you qualify for standard insurance rates. You
can do this yourself at websites such as Kanetix.com or Insurance Direct Canada. If youre a
42-year-old female non-smoker who wants a 20-year term policy for $500,000, youll find that your
standard rate is approximately $60 a month. If you smoke, you can double that.
To actually get a policy, you will have to answer many more questions about your health, your
family medical history, your use of alcohol and tobacco, your financial status and any dangerous
activities youre involved in. For large policies, the insurance company will require a medical
exam, including a blood test. An underwriter will then decide whether to offer you the standard
rate. In 60% of cases, thats exactly what the underwriter does. If you are exceptionally healthy
and have no family history of serious illness, you may even qualify for preferred rates, which are
lower than standard. That happens in about 30% of cases.
But not all people are so lucky. If the underwriter feels youre more likely to die than others of
your age and sex, youll either be denied coverage (this happens in about 3% to 6% of cases), or
youll get a rating that leads to higher premiums. These are expressed as a percentage: if you
get a 50% rating, youll pay 50% more than the standard rate, while a 100% rating means your
premiums will double. Usually the ratings are from 50% to 400% more than standard, says Lorne
Marr, an independent broker in Markham, Ont. In other words, being labelled high risk can lead to
premiums four or five times higher than standard, sometimes even more.
Life insurers consider many factors before slapping a rating on you. Smoking is the biggest single
risk factor, though alcohol is important as well. If you drink three glasses of wine a day, as
opposed to one, you might pay an extra premium, says Marr. If youre an alcoholic, you wont get
coverage at all. If youre a recovering alcoholic, you should be able to qualify at the standard
rate after a certain amount of time, usually in three to five years.
As Knapp discovered, recreational activities such as flying, skydiving, scuba diving and rock
climbing can also make you a high-risk case. Whether this results in a rating depends on your level
of involvement, how many hours you fly or where you do your climbing, for instance.
With medical conditions, its not as simple as saying high blood pressure equals a rating of so
many percentage
points. Very few conditions are cut and dried, says Brian Baxter, chief
underwriter at Wawanesa Life in Winnipeg and chair of the Canadian Institute of Underwriters. While
recently diagnosed cancer or heart disease results in automatic declines, other conditions,
including diabetes, obesity, high blood pressure and high cholesterol, can result in a rating, but
the ultimate effect depends on the severity of the condition. Ublansky was turned down for
insurance because his blood sugar was three times normal, he was overweight and didnt even know he
had diabetes. However, a person within the normal weight range who can demonstrate that his
condition is under control may receive no rating at all. Ive had all kinds of people with high
blood pressure approved at standard rates, Marr says.
Family history matters less than you may think. If one of your parents or a sibling died from
cancer or heart disease, you will not get rated. (A few conditions, however, will set off the alarm
bells. For instance, if you have immediate family members with Huntingtons disease, which has a
very high hereditary component, you will likely be rated or declined coverage.) Your occupation
isnt usually a big factor either, even police officers and firefighters get standard rates, for
example. The few jobs that may require higher premiums include bomb defuser, deep-sea diver and
race car driver.
If youre denied coverage or slapped with a rating, you may be tempted to go to another insurance
broker or company and try again, this time leaving some choice information off the questionnaire.
This strategy, alas, isnt going to work. When you fill out an application, your signature
authorizes the company to send your information to the Medical Information Bureau (MIB), whose
membership includes hundreds of North American insurers. The insurance industry would rather you
not know about MIB, but heres how it works: if an underwriter discovers something worrisome in
your questionnaire or medical exam results, he or she adds an alphanumeric code to your MIB file.
This code might translate to applicants doctor reported diabetes in 2006,or lab tests indicated
cocaine use in 2005.
If you apply for coverage with another company in the future, your underwriter can access this
information, the same way your bank checks a credit bureaus file when you apply for a loan. Your
MIB file does not include the name of the company you applied with in the past, nor does it
indicate whether you were declined or rated, although since it contains only red flags, the
implication is obvious. An insurer is not permitted to decline or rate you based solely on
information from MIB, but if something untoward turns up, the insurer will ask more questions and
perhaps order more tests. (You can obtain a free copy of your MIB file by calling 1-866-692-6901 or
visiting www.mib.com/html/request_your_record.html.)
So what should you do if you have been turned down or quoted exorbitant rates? You have several
options:
Find an independent broker. Some insurance companies employ agents who sell only that firms
products, but high-risk applicants are better off finding an independent broker. Each insurer has
its own underwriting protocols, and an experienced broker will have a feel for which insurance
company is likely to offer the most favorable rating to a client with a particular risk factor. Ask
your broker to submit applications to two or three carriers at the same time to stir up
competition. Going this route does not mean that you will have to endure two or three medical
exams: the broker can help arrange a single examination, and the competing insurance companies will
split the cost.
Get your health condition under control. Ublanskys story has a happy ending. After getting
declined, he devoted himself to improving his health. A self-described former couch potato,
Ublansky went for nutritional counseling, started exercising and lost 35 kg in about a year. He
took medication and watched his blood sugar levels drop back to normal. Then, with the help of
Marr, the insurance broker, he pulled together all the medical documentation and reapplied. Not
only was he approved for a whole-life policy worth $1.5 million, hes paying standard rates.
Ask for a temporary rating. If you are quoted higher premiums because of a medical condition that
may improve in the coming years, ask whether the insurer will agree to a temporary rating,
sometimes called a flat extra. For example, if you were successfully treated for cancer, but the
insurance company is concerned about it recurring, they may agree to charge a higher premium only
for a specified number of years. There are forms of cancer that
are treated quite well today, and
if the person is free of it for five to 10 years, they may well qualify at standard rates after
that, Baxter explains.
Accept the higher premium, for now. I often recommend that if you get rated, take the policy, even
if its for only a few months, says Marr. That becomes your worst-case scenario. A good example
is diabetes: you may get rated at 75% or 100%, and if it improves, then we can apply to get that
rating removed. But lets say you dont take the policy and then suddenly develop kidney problems.
Diabetes plus kidney problems equals a decline.
Seek an exclusion. If your high-risk rating stems from a dangerous avocation, you can opt for a
waiver, or exclusion, that releases the insurer from paying a benefit if you die while engaged in
that activity. Thats the option Knapp settled on: he now pays standard rates, but if he were to
die while piloting a plane, his beneficiaries would receive nothing. For Knapp it was a relatively
easy decision, since he flies far less today than he once did. If I was still going to be doing a
lot of flying, I would have been more concerned.
Consider a guaranteed issue policy. Weve all seen the commercials with the grinning seniors who
just got life insurance with no medical exam. These ads are for guaranteed issue policies, which
are available to anyone and require you only to fill out a brief questionnaire. Of course, there is
a catch. The coverage is rarely more than $25,000, the policies usually dont pay if you die within
two years, and the premiums are sky high: for a 40-year-old male non-smoker, a paltry $25,000
policy costs about $56 a month. For that amount, a person of the same age who qualified at standard
rates could buy a 20-year term policy with more than 15 times the coverage. These policies are a
last resort, says Marr. But if you truly need insurance, they may be your only choice.
Return to Top
Looking for TDs view on articles about the bank or the financial industry? Visit TD News & Views
for background on some stories of the moment that may come up in your discussions with customers,
colleagues and friends.
Vous cherchez des opinions et des articles de la TD au sujet du secteur bancaire ou financier?
Visitez Nouvelles et Opinions de la TD pour y trouver de linformation sur certains sujets
dactualité qui peuvent être évoqués dans vos discussions avec des clients, des collègues et des
amis.
The terms of our contract allow the Daily Media Roundup to be used exclusively by TD Bank Financial
Group employees; please do not distribute outside TDBFG. Contact Samson Yuen with any questions.
Les modalités de notre contrat permettent lutilisation exclusive du Survol quotidien des médias
par les employés du Groupe Financier Banque TD; veuillez ne pas faire circuler à lextérieur du
GFBTD. Veuillez communiquer avec Samson Yuen pour toute question.
The information presented may contain forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995 and comparable safe harbour provisions of
applicable Canadian legislation, including, but not limited to, statements relating to anticipated
financial and operating results, the companies plans, objectives, expectations and intentions,
cost savings and other statements, including words such as anticipate, believe, plan,
estimate, expect, intend, will, should, may, and other similar expressions. Such
statements are based upon the current beliefs and expectations of our management and involve a
number of significant risks and uncertainties. Actual results may differ materially from the
results anticipated in these forward-looking statements. The following factors, among others,
could cause or contribute to such material differences: the ability to obtain the approval of the
transaction by The South Financial Group, Inc. shareholders; the ability to realize the expected
synergies resulting from the transaction in the amounts or in the timeframe anticipated; the
ability to integrate The South Financial Group, Inc.s businesses into those of The
Toronto-Dominion Bank in a timely and cost-efficient manner; and the ability to obtain governmental
approvals of the transaction or to satisfy other conditions to the transaction on the proposed
terms and timeframe. Additional factors that could cause The Toronto-Dominion Banks and The South
Financial Group, Inc.s results to differ materially from those described in the forward-looking
statements can be found in the 2009 Annual Report on Form 40-F for The Toronto-Dominion Bank and
the 2009 Annual Report on Form 10-K of The South Financial Group, Inc. filed with the Securities
and Exchange Commission and available at the
Securities and Exchange Commissions Internet site
(http://www.sec.gov).
The proposed merger transaction involving The Toronto-Dominion Bank and The South Financial Group,
Inc. will be submitted to The South Financial Group, Inc.s shareholders for their consideration.
Shareholders are encouraged to read the proxy statement/prospectus regarding the proposed
transaction when it becomes available because it will contain important information. Shareholders
will be able to obtain a free copy of the proxy statement/prospectus, as well as other filings
containing information about The Toronto-Dominion Bank and The South Financial Group, Inc., without
charge, at the SECs internet site (http://www.sec.gov). Copies of the proxy statement/prospectus
and the filings with the SEC that will be incorporated by reference in the proxy
statement/prospectus can also be obtained, when available, without charge, by directing a request
to The Toronto-Dominion Bank, 15th floor, 66 Wellington Street West, Toronto, ON M5K 1A2,
Attention: Investor Relations, 1-866-486-4826, or to The South Financial Group, Inc., Investor
Relations, 104 South Main Street Poinsett Plaza, 6th Floor, Greenville, South Carolina 29601,
1-888-592-3001.
The Toronto-Dominion Bank, The South Financial Group, Inc., their respective directors and
executive officers and other persons may be deemed to be participants in the solicitation of
proxies in respect of the proposed transaction. Information regarding The Toronto-Dominion Banks
directors and executive officers is available in its Annual Report on Form 40-F for the year ended
October 31, 2009, which was filed with the Securities and Exchange Commission on December 03, 2009,
and in its notice of annual meeting and proxy circular for its most recent annual meeting, which
was filed with the Securities and Exchange Commission on February 25, 2010. Information regarding
The South Financial Group, Inc.s directors and executive officers is available in The South
Financial Group, Inc.s proxy statement for its most recent annual meeting, which was filed with
the Securities and Exchange Commission on April 07, 2010. Other information regarding the
participants in the proxy solicitation and a description of their direct and indirect interests, by
security holdings or otherwise, will be contained in the proxy statement/prospectus and other
relevant materials to be filed with the SEC when they become available.
Les renseignements présentés peuvent contenir des énoncés prospectifs au sens de la loi Private
Securities Litigation Reform Act of 1995 et des dispositions dexonération comparables des lois
canadiennes applicables, y compris, mais sans sy limiter, des énoncés relatifs à des résultats
financiers et dexploitation prévus, aux plans, aux objectifs, aux attentes et aux intentions, aux
économies de coûts et à dautres énoncés des sociétés, qui comprennent des termes et expressions
comme « anticiper », « croire », « planifier », « estimer », « prévoir », « avoir lintention de »
et « pouvoir », ainsi que des verbes au futur ou au conditionnel et dautres expressions
similaires. Ces énoncés sont fondés sur les croyances et les attentes actuelles de notre direction
et comportent un certain nombre de risques et dincertitudes importants. Les résultats réels
peuvent différer considérablement des résultats avancés dans les présents énoncés prospectifs. Les
facteurs suivants, entre autres choses, pourraient entraîner de tels écarts importants ou y
contribuer : la capacité dobtenir lapprobation de la transaction par les actionnaires de The
South Financial Group, Inc. (« South Financial »), la capacité de réaliser les synergies prévues
découlant de la transaction selon les montants ou léchéancier prévus, la capacité dintégrer les
activités de The South Financial Group, Inc. à celles de La Banque Toronto-Dominion en temps
opportun et de manière rentable, et la capacité dobtenir les approbations gouvernementales de la
transaction ou de remplir dautres conditions liées à la transaction selon les modalités et
léchéancier proposés. Dautres facteurs qui pourraient faire en sorte que les résultats de La
Banque Toronto-Dominion et de The South Financial Group, Inc. diffèrent considérablement de ceux
décrits dans les énoncés prospectifs se trouvent dans le rapport annuel de 2009, dans le formulaire
40-F, pour La Banque Toronto-Dominion, et dans le rapport annuel de 2009, dans le formulaire 10-K
de South Financial déposé auprès de la Securities and Exchange Commission (SEC) et disponible sur
le site Internet de la SEC (http://www.sec.gov).
La proposition de fusion entre La Banque Toronto-Dominion et The South Financial Group, Inc. sera
présentée aux actionnaires de The South Financial Group, Inc afin quils lexaminent. Les
actionnaires sont invités à lire la circulaire de sollicitation de procurations ou le prospectus
provisoire lié à la transaction de fusion proposée et la circulaire de
sollicitation de procurations ou le prospectus définitif lorsquil sera disponible, ainsi que les
autres documents déposés auprès de la SEC, car ils contiennent des renseignements importants. Les
actionnaires peuvent obtenir un exemplaire gratuit de la circulaire de sollicitation de
procurations ou du prospectus provisoire et ils pourront obtenir un exemplaire gratuit de la
circulaire de sollicitation de procurations ou du prospectus définitif lorsquil sera disponible,
ainsi que des autres documents ayant fait lobjet dun dépôt qui contiennent de linformation sur
La Banque Toronto-Dominion et The South Financial Group, Inc., et ce, sans frais, sur le site
Internet de la SEC (http://www.sec.gov). Des exemplaires de la circulaire de sollicitation de
procurations ou du prospectus définitif et des documents déposés auprès de la SEC qui seront
intégrés par renvoi dans la circulaire de sollicitation de procurations ou le prospectus définitif
peuvent aussi être obtenus, lorsquils seront disponibles, sans frais, en soumettant une demande [à
La Banque Toronto-Dominion, 66 Wellington Street West, Toronto (Ontario) M5K 1A2, à lattention de
: Relations avec les investisseurs, 416-308-9030] ou à The South Financial Group, Inc. Investor
Relations, 104 South Main Street Poinsett Plaza, 6th Floor, Greenville, South Carolina 29601,
1-888-592-3001.
La Banque Toronto-Dominion, The South Financial Group, Inc., leurs administrateurs et leurs
dirigeants respectifs et dautres personnes peuvent être réputés être des participants à la
sollicitation de procurations relativement à la transaction de fusion proposée. Linformation
concernant les administrateurs et les dirigeants de La Banque Toronto-Dominion est disponible dans
son rapport annuel, dans le formulaire 40-F, pour lexercice terminé le 31 octobre 2009, qui a été
déposé auprès de la SEC le 3 décembre 2009, son avis de convocation à lassemblée annuelle et sa
circulaire de la direction sollicitant des procurations, qui a été déposée auprès de la SEC le 25
février 2010. Linformation concernant les administrateurs et les dirigeants de The South
Financial Group, Inc. est disponible dans la circulaire de sollicitation de procurations de The
South Financial Group, Inc. de sa plus récente assemblée annuelle, qui a été déposée auprès de la
SEC le 7 avril 2010. Dautres renseignements sur les participants à la sollicitation de
procurations et une description de leurs intérêts directs et indirects, par titres détenus ou
autres, seront inclus dans la circulaire dinformation/le prospectus et dautres documents
pertinents qui seront déposés auprès de la SEC lorsquils seront disponibles.