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 communications sent to employees of The Toronto-Dominion Bank
and/or TD Bank, Americas Most Convenient Bank on July 7, 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. The Toronto-Dominion Bank and The South Financial Group, Inc. have filed with the
SEC a Registration Statement on Form F-4 containing a preliminary proxy statement/prospectus and
each of the companies plans to file with the SEC other documents regarding the proposed
transaction. Shareholders are encouraged to read the preliminary proxy statement/prospectus
regarding the proposed transaction and the definitive proxy statement/prospectus when it becomes
available, as well as other documents filed with the SEC because they contain important
information. Shareholders may obtain a free copy of the preliminary proxy statement/prospectus,
and will be able to obtain a free copy of the definitive proxy statement/prospectus when it becomes
available, 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 definitive proxy statement/prospectus and the filings with the SEC that will be
incorporated by reference in the definitive proxy statement/prospectus can also be obtained, when
available, without charge, by directing a request to TD Bank Financial Group, 66 Wellington Street
West, Toronto, ON M5K 1A2, Attention: Investor Relations, 1-866-756-8936, 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,
its notice of annual meeting and proxy circular for its 2010 annual meeting, which was filed with
the Securities and Exchange Commission on February 25, 2010, and the above-referenced Registration
Statement on Form F-4, which was filed with the SEC on June 10, 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 2010 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, is contained in the above-referenced Registration Statement on Form F-4, which was filed
with the SEC on June 10, 2010, and other relevant
materials to be filed with the SEC when they become available.
THE FOLLOWING IS A COMMUNICATION SENT TO EMPLOYEES OF TD BANK, AMERICAS MOST CONVENIENT BANK AND
THE TORONTO-DOMINION BANK ON JULY 7, 2010
Daily News Brief
July 7, 2010
Compiled by Jimmy A. Hernandez, Corporate and Public Affairs
TD BANK NEWS
1. |
|
Lending Pullback Hurts The Smallest NJ Biz |
Despite an infusion of nearly $700 billion in taxpayer support through the Troubled Asset Relief
Program, many banks have curtailed their small-business lending. [TD Banks Nicholas Miceli
is quoted.]
2. |
|
TD Bank Pushes Totally Flat Debit Cards The Consumerist (blog) |
Run your fingers over one of TD Banks new debit cards and youll notice something missing. Theres
no embossed numbers. Its not a fake, its the future: a completely flat debit card that can be
issued right on the spot when you open an account at a local bank, with no waiting for it to arrive
in the mail.
3. |
|
DBRS Confirms TD Bank Ratings Investment Executive |
DBRS Ltd. has confirmed its ratings on Toronto-Dominion Bank at AA and R-1 (high), pointing
primarily to the banks strong position in domestic retail banking.
4. |
|
Reasons Why You May Want to Close a Bank Account or Two Wallet Pop (blog) |
Now that many major banks are getting rid of free checking accounts, it may be a good time to
assess just how many banks accounts you have and how much they may be costing you. [TD Banks
Ryan Bailey is quoted.]
5. |
|
Mann Earns Riverside Scholarship TC Palm (FL) |
Riverside National Bank, a division of TD Bank, recently awarded Sarah Mann of Vero Beach with a
$1,000 college scholarship in the banks ninth annual College Scholarship Program. [TD Banks
Patti Morris is quoted.]
6. |
|
Can Buildings Help Keep You Healthy? Queens Ledger (NY) [Same article appears in
The Courier Times of PA] |
We spend 90 percent of our lives indoors, according to the Environmental Protection Agency (EPA). A
typical day can include traveling from home to work and back home again with a few periodic trips
to schools, the grocery store, the bank, malls and entertainment venues.
Page 1 of 15
We depend on our homes, offices, retail stores and other structures to keep us safe; but can
buildings also help keep us healthy? [TD Banks Scott Hite is quoted.]
INDUSTRY NEWS
1. |
|
FDIC Plots New Resolution Plan for Large Financial Firms American Banker |
The Federal Deposit Insurance Corp. is not waiting for regulatory reforms enactment to develop
plans for a new resolution system.
2. |
|
Municipal Debt Levels Putting U.S. Banks at Risk as Local Budget Deficits Grow -
Bloomberg News |
Citigroup Inc., State Street Corp. and U.S. Bancorp are among U.S. banks whose municipal bond
holdings have reached a 25-year high just as state budget deficits swell to $140 billion, the most
since the start of the recession.
TD BANK NEWS
1. |
|
Lending Pullback Hurts The Smallest
Banking commissioner says loan practices must ease to help businesses
By Martin C. Daks
July 5, 2010 NJ Biz |
Despite an infusion of nearly $700 billion in taxpayer support through the Troubled Asset Relief
Program, many banks have curtailed their small-business lending.
That fact hasnt gone unnoticed in Trenton.
We need to do everything possible to reverse this trend, said Banking Commissioner Thomas B.
Considine, but admitted its an uphill battle.
Small-business lending nationwide remains severely constricted, according to a March report from
the Congressional Oversight Panel on TARP, which found lending plummeted during the 2008 financial
crisis, and remained sharply restricted throughout 2009.
That must change, Considine said: Small businesses are crucial to the economic recovery.
Some banks, like JPMorgan Chase, are expanding their small-business loan operations. Chase said it
loaned $2.1 billion to small businesses in the first quarter, up 31 percent from a year earlier;
has hired 235 small-business bankers; and plans to hire 100 more by year-end. A second review
process for initially rejected business loans has resulted in $113 million additional
small-business loans, Chase said.
Allentown entrepreneur Jay Battisti is a small-business owner who hasnt been able to land
expansion capital. The third-generation company that his dad started, and which Battisti reworked
as The Pork Roll Store, could expand if he could get a loan for new equipment, but after a 60-year
relationship with a large bank, were getting the brush-off, he said.
Battisti said the small food-manufacturing firm thats now run by his daughter needs new equipment
to expand its product line, but hes stymied by financing.
Page 2 of 15
Weve got the market and weve got the plans, he said. Back in the old days, when our banker was
independent, it was not a problem to get financing, even in tough times. But not anymore. Many
banks dont even respond when we submit a loan application.
As Considine sees it, much of the problem is that recession-battered banks, prompted by federal
regulators, have tightened credit standards to unreasonable levels. That must change if we are
going to have a sustainable economic recovery.
He thinks many bank examiners are too quick on the draw, reclassifying some loans as nonperforming
simply because the value of the collateral has declined too low even if the borrower is still
able to make the debt payments.
Maybe the pendulum swung too far in one direction, but now its swinging too far the other way,
he said.
Considine also is asking banks to boost their loan-to-value ratios the loan amount divided by
the value of the asset it finances from the current draconian level of 60 percent to a more
reasonable level, toward 70 percent and if that works, maybe to 80 percent, he said. Of
course, in the bubble days, LTVs all too often went beyond 100 percent, while risk evaluation
remained cursory and underwriting standards were too loose.
Considine also takes issue with the way collateral is valued. Looking at a snapshot of an asset
as of a certain day doesnt reflect its true worth, he said. It might be better to average it over
a period of time, he said, rather than looking at its peak or valley.
He has the support of John E. McWeeney Jr., co-CEO of the New Jersey Bankers Association.
Many banks, especially the smaller community banks, want to lend to small businesses, but bank
examiners have been too aggressive about downgrading loans, he said.
But McWeeney said banks arent entirely responsible for the decline in lending activity.
We think that part of it is due to a lack of demand on the part of business borrowers, he said.
Some business owners are apprehensive about taking on more debt right now. But we are seeing some
pickup as companies that deeply trimmed their operations now seek to replenish their inventory.
Regardless, Considines trying to win over regulators and bank examiners. That would be easier, he
said, if other state banking commissioners banded with him to present a unified front but thats
not happening yet. Bank examiners have to consider the issues of their individual state, he said.
Some of them arent on board ... but at least the discussions so far are fruitful.
Not everyone agrees with Considines concerns about bank examiners.
Were lending in the 70 to 75 percent LTV range when appropriate, and we havent had any problems
with bank examiners, said Nicholas Miceli, the Bridgewater-based market president for TD Bank
Central New Jersey. Were looking at borrowers bottom lines, but were also focused on their
cost-cutting and revenue-enhancing efforts. We want to understand what theyve been through in the
past 18 months or so, and then evaluate the steps theyve taken to respond to the conditions.
Page 3 of 15
Another banker also denied getting much heat from examiners: Weve heard from some banks that
their examiners are overly aggressive, but our bank hasnt been affected by it, said Kevin
Cummings, CEO of Investors Savings Bank. We havent had any problems with our regulators. We
continue to follow the prudent lending policies we always have, whether the economy is booming or
not.
Top
2. |
|
TD Bank Pushes Totally Flat Debit Cards
By Ben Popken
July 6, 2010 The Consumerist (blog) |
Run your fingers over one of TD Banks new debit cards and youll notice something missing. Theres
no embossed numbers. Its not a fake, its the future: a completely flat debit card that can be
issued right on the spot when you open an account at a local bank, with no waiting for it to arrive
in the mail.
We covered this recently as part of another post but its so odd we thought it worth calling out on
its own.
TD Bank introduced the cards in 2007 as a pilot program and seems to have recently pushed them out
to ex-Commerce Bank locations and customers, which is how I noticed it when it came in the mail.
Theres really little reason for cards to be embossed these days because most transactions are done
by swiping. I think the only times recently someone did a rubbing of my card was a jitney cab and
Chinese food delivery boy.
Use your new TD Bank Visa® Debit Card every day, everywhere you shop.
TD Banknorth is First to Offer Customers Instant Access to Flat-Panel Debit Cards.
Top
3. |
|
DBRS Confirms TD Bank Ratings
Execution of banks U.S. retail and commercial banking strategy remains a challenge
By James Langton
July 6, 2010 Investment Executive |
DBRS Ltd. has confirmed its ratings on Toronto-Dominion Bank (TSX:TD) at AA and R-1 (high),
pointing primarily to the banks strong position in domestic retail banking.
The rating agency said Tuesday that TDs Canadian personal and commercial banking division
generated $2.5 billion of net income in 2009 and is expected to continue to provide earnings
stability. It notes that TD had a solid number one market share ranking in personal deposits and
number two in lending in Canada.
Its retail distribution network expansion, significantly longer hours of service relative to its
peers and relentless drive to improve customer service index scores are critical to the
Page 4 of 15
banks franchise strength and have led to its successful growth in Canadian retail market shares,
including credit cards, property and casualty insurance, small business and commercial banking, it
says.
DBRS also says that TDs large retail operations contribute to its lower business risk profile than
some of its peers.
Where there is some risk is in the banks U.S. expansion efforts. DBRS notes that TD has been back
on the acquisition trail, buying The South Financial Group, and doing an FDIC-assisted acquisition
of three Florida banks, although it says that neither of these deals had an impact on TDs ratings.
Longer term, DBRS believes successful execution of TDs U.S. retail and commercial banking
strategy will contribute positively to the banks business franchise as it begins to generate
acceptable returns on invested capital for the bank and becomes a platform for further growth,
albeit with a degree of risk. The execution, however, remains a challenge, it says.
Moreover, it notes that the slowdown in the global economy has negatively affected loan loss
provisions in the U.S. and Canadian retail banking segments. Credit costs are expected to remain
elevated in the near term but manageable relative to the TDs earnings before loan losses and
taxes, it says.
Finally, DBRS says that while TD, and the other large Canadian banks, have increased their capital
ratios, potential changes to regulatory capital rules could negatively affect these ratios.
Nevertheless, it says that the bank has the ability to generate substantial levels of internal
capital to offset the effect of these changes, which are likely to be put into effect in fiscal
2013.
Top
4. |
|
Reasons Why You May Want to Close a Bank Account or Two
By Geoff Williams
July 6, 2010 Wallet Pop (blog) |
Now that many major banks are getting rid of free checking accounts, it may be a good time to
assess just how many banks accounts you have and how much they may be costing you.
Theres even a slight chance you might have more accounts than you realize. CESI Debt Solutions
recently conducted a survey (so new that the survey isnt online yet) that found that 15% of
married couples will admit they have a bank account that their spouse doesnt know about.
These days when it comes to bank accounts, less may be more. Here are several reasons why:
Bank fees. A handful of financial institutions, like Wells Fargo, have said that theyre going to
stop offering free checking to new customers, and some places, like Bank of America, are reportedly
considering some form of tiered checking (where you can have free checking if you minimize your
trips into the branch) starting next year. (No plan has been formally
Page 5 of 15
announced yet.) So obviously if your bank starts charging a maintenance fee, it makes much more
sense to have one or two accounts than six or seven.
More accounts can cause more confusion. My head started to spin, says Michael Kay, a certified
personal finance adviser and the president of Financial Focus LLC, headquartered in Livingston, New
Jersey, referring to a young couple advised. The couple, who were about to be married, each had
their own account and then a joint account that they used for paying bills. It may work well for
some people, but moving this money from one account and switching it to anotherthat amount of
manipulation and maintenance can get pretty complex.
And expensive. Make a few mistakes moving that money around youll end up paying handsomely for the
error. Should say a gasoline charge go through at a time when you thought you had more money in a
particular account but you forgot you transferred some funds you could unleash a chain
reaction of overdraft charges and insufficient fund penalties.
More accounts can lead to a higher risk of identity theft. Thats one of the conclusions of a
recent Bankrate.com article. I have to admit, if you feel like youre safe having one account in a
bank, you should feel equally safe having two or three or more accounts. You never want to take
stupid risks, but lifes too short to worry about every possible way you can be targeted by an
identity thief.
There is the environmental factor. More accounts can lead to more paper statements. Well, unless
you opt for electronic statements.
I have several checking accounts between my bank and credit union, and I could definitely eliminate
one or two that arent doing much more than collecting cobwebs. But for the most part, I like that
at my credit union, I can have one account dedicated solely to saving up for a vacation.
Each customers needs are different, and some people definitely do better with several accounts
than just one, says Ryan Bailey, head of deposit of products at TD Bank.
But if youre hanging onto multiple accounts out of nostalgia, you may want to think again.
Consolidating accounts can help you avoid fees or at least minimize the percentage impact of
certain fees. It can also qualify you for better bank rates, especially on money market accounts.
Meanwhile, with the FDIC deposit limit raised to $250,000 temporarily and perhaps soon to be
permanent consumers can safely consolidate more money in accounts than ever before, says
Richard Barrington, CFA and primarily spokesperson at MoneyRates.com.
Financial Focuss Michael Kay concurs. People are looking for the simplest, easiest way of living
their financial lives, so it doesnt absorb all of their time and energy. So just for that reason
alone, the fewer the accounts, the more simple financial management should be. You need to ask
yourself: Whats enough to do what needs to be done? If you cant achieve your goals with one
checking account and one savings account, then you expand them to meet your personal needs. But
there should be a real good reason to have 12 accounts.
Top
Page 6 of 15
5. |
|
Mann Earns Riverside Scholarship
July 6, 2010 TC Palm (FL) |
Riverside National Bank, a division of TD Bank, recently awarded Sarah Mann of Vero Beach with a
$1,000 college scholarship in the banks ninth annual College Scholarship Program.
Students attending either a two or four-year post-secondary school were eligible to apply. Mann was
selected based on her academic goals, community service and written essay about why she feels she
deserves the money.
Our scholarship program is another example of Riversides commitment to the people of Vero Beach
said Patti Morris, SVP/Regional Manager. Riverside, now a division of TD Bank, is dedicated to
support education. We know this program will make a difference in the life of the scholarship
recipient.
Mann serves her community by being an active member of her church, doing weekly missionary work and
teaching a religion class once a month. She participated in the first Indian River County Day of
Service and has served at the Harvest Food and Outreach Center in Fort Pierce. Mann also volunteers
at her childrens school whenever possible.
Mann plans to pursue a degree at Indian River State College, where she aspires to be a nurse.
Top
6. |
|
Can Buildings Help Keep You Healthy?
July 7, 2010 Queens Ledger (NY) [Same article appears in The Courier Times of PA] |
We spend 90 percent of our lives indoors, according to the Environmental Protection Agency (EPA). A
typical day can include traveling from home to work and back home again with a few periodic trips
to schools, the grocery store, the bank, malls and entertainment venues. We depend on our homes,
offices, retail stores and other structures to keep us safe; but can buildings also help keep us
healthy?
Recent EPA studies indicate that exposure to air pollutants may be two to five times higher indoors
than outside. Air pollutants can affect all buildings equally and have many sources, including
pets, tobacco products, gas cooking stoves, building materials, paints, cleaning products and
pesticides. Exposure to air pollutants can lead to negative health effects like asthma, irritation
of the eyes and throat, headaches, dizziness, fatigue and allergic reactions.
Although these circumstances are concerning, you can do many simple things to improve the indoor
air quality you and your family are exposed to.
Also consider this More and more retail businesses are assimilating greener operations in order
to satisfy rising consumer demands to go green, says Scott Hite, chief architect at TD Bank. As a
result, consumers can choose to do business with retailers that build stores that provide good
indoor air quality, make an investment in renewable energy and build sustainability to minimize
their environmental footprint.
Page 7 of 15
Here are a few important things to consider
* Keep it smoke-free. At home, banish smoking indoors and if it hasnt already been done, ask your
boss to do the same at work. Consider doing business with retailers that dont allow smoking inside
or near their businesses in order to keep their customers safe from tobacco smoke, a harmful air
pollutant.
* Consider LEED certification. Do your research to find businesses that have pledged to be carbon
neutral and are building LEED certified stores. LEED, which stands for Leadership in Energy and
Environmental Design, evaluates buildings for their overall performance in indoor environmental
quality and four other environmental areas.
There a number of retail businesses that have made commitments to building LEED certified
structures, says Hite. At TD Bank, for example, we made a commitment to be carbon neutral and to
build LEED certified green stores that will benefit our customers and employees overall health.
* Avoid products with VOCs. Paints, sealers, adhesives and many other building products emit VOCs,
volatile organic chemicals. Exposure to these chemicals can cause numerous health effects.
For your home and at work, choose products that have no or low VOCs. Retail businesses that are
carbon neutral with green stores also use building materials with no or low VOCs in order to
achieve LEED certification.
* Choose green cleaning. Harsh cleaning chemicals contribute to poor indoor air quality and can
cause adverse health reactions. Instead, choose from a large variety of cleaning products with low
toxicity levels. Wherever possible, also store chemicals and cleaning supplies in well ventilated
areas.
Buildings can be healthy through a combination of good technology, the right products, and a
healthy dose of good old common sense. Knowing which rules to enforce at home, which products to
purchase and choosing retail businesses that are making strides to provide healthier indoor air
quality for their customers, can prevent many potential health problems in the future.
Top
INDUSTRY NEWS
1. |
|
FDIC Plots New Resolution Plan for Large Financial Firms
By Joe Adler
July 7, 2010 American Banker |
The Federal Deposit Insurance Corp. is not waiting for regulatory reforms enactment to develop
plans for a new resolution system.
Under the final reform bill, which the House approved last week and is expected to pass the Senate
soon, the FDIC would for the first time be required to unwind large, systemically
Page 8 of 15
important banks
and nonbanks to prevent the type of disorder caused by Lehman Brothers bankruptcy in 2008.
Even though another failure of a systemically vital firm is a distant possibility in the short
term, the agency is required to issue several rules to ensure a new structure is up and running
soon.
This is not the kind of authority you want to wait until the last minute to exercise, said V.
Gerard Comizio, a partner at Paul, Hastings, Janofsky & Walker.
Key early tasks for the FDIC include providing market clarity for creditors on what they would
receive, if anything, in a failure of a systemically important firm; designating certain FDIC
officials to focus on the new resolution powers; and researching the companies the agency may have
to unwind. The FDIC will also have to address issues associated with having two different
resolution funds: one for banks and another for nonbanks.
Michael Krimminger, the deputy to the FDIC chairman for policy, said the agency has done
preliminary planning in order not to be caught flat-footed once the implementation schedule
begins. He said the sooner the market has clarity about what happens to a large firm when it fails,
the better.
We think its imperative to move quickly, simply because we cant be in a situation in the future
like we were in the fall of 2008. Then, things had to be done on a much more ad hoc basis than they
ever should be, because no one had the statutory authority to resolve the largest nonbank firms,
Krimminger said.
The legislation, which is likely to be signed by the president this month, would require the
establishment of the orderly resolution structure immediately after enactment.
One of the first things they would need to do is develop an internal organization that is ready to
deal with the new mandate, said Satish Kini, a partner at Debevoise & Plimpton LLP.
Observers said the new regulations would have to lay out specifically how the agency plans to treat
everything from financial contracts between counterparties, to customer accounts, to the transfer
of assets to an acquirer.
Unlike the bank receivership process, which is tried and true and there is a long history out
there of how to handle things, this is completely new, said Kevin Stein, a managing director in
FBR Capital Markets and a former associate director in the FDICs resolutions division. The
legislation is like the blueprint. The FDIC would have to build a set of construction documents.
From the construction documents, you then have to hire contractors, and then they have to build the
foundation.
The legislation requires the agency to try to harmonize the rules with the current insolvency
procedures in the bankruptcy code.
In addition, the bill would grant the agency authority either to lead or participate in
rule-writing with other regulators on more specific issues, including how receiverships would be
terminated, joint rules with the Securities and Exchange Commission related to the liquidation of
broker-dealers and regulations on how the agency could use funds to run a receivership.
Page 9 of 15
The bill would allow the FDIC to borrow funds from the Treasury and pay them back through recovery
sales and assessments on other systemically important firms. A separate rulemaking would establish
the new assessment system.
Other parts of the bill require additional regulations, including a joint rulemaking with the
Federal Reserve Board on standards for large firms to lay out their own resolution plan, or
so-called living will.
How the agency will establish rules to pay off creditors is likely to be a source of significant
debate, observers said.
Stein said there is currently no rule book for how a receiver would deal with a failed nonbanks
counterparties, and while transferring the core of a bank to a buyer is the agencys bread and
butter, assisted transactions for nonbanks are another story.
There is a long history of how the FDIC deals with these items in a bank receivership, but theres
really no precedent and no model at the FDIC for the nonbank context, Stein said. Theyre
starting with the existing resolution process for banks and the bankruptcy code. It could take
them a long time to put the framework in place.
He added that while bank receiverships follow a rigid hierarchy of which liabilities are covered,
it is unclear whether the FDIC would have a similar order for nonbanks. The issue of the priority
of claims has to be spelled out: can they handle assets and liabilities individually, can they
cherry pick what they sell and what they hold back, and in what priority do they do it? Stein
said.
But the agency does have at least one advantage since nonbank receiverships would not entail any
insured depositors.
Krimminger said that could give the agency some breathing room since there would be no statutory
requirement that the agency provide relief beyond what it gets from resources inside the failed
institution.
Since you dont have any guaranteed creditors you dont have the $250,000 to depositors youre
much more likely to be able to recover all of the administrative expenses from selling the assets,
he said.
Others said the mix of assets and liabilities the agency would have to sort through is comparable
to what it finds in failed banks.
On the liabilities side you do have points of considerable distinction, where banks are mainly
deposit-taking institutions and [companies] like Goldman Sachs would have nothing in the way of
deposits. Its funded with a variety of different borrowing sources, said William Longbrake, a
former vice chairman of Washington Mutual and FDIC chief financial officer, who is now an
executive-in-residence at the University of Maryland.
But even there, the FDIC does deal with those sources: subordinated debt and other debt
instruments in banks, and asset-backed securities that were issued by the failed institution.
Also on the agenda for implementing the new system is labeling exactly which institutions could
fall into the FDICs hands.
Page 10 of 15
The first step has got to be: Whats the universe? Whos potentially a ward of this new
authority? said William Isaac, a former FDIC chairman and now the chairman of Fifth Third Bancorp,
who spoke for himself and not the bank. I would be studying their financials and trying to figure
out: What would be the challenge of taking one over?
Observers said the process of designating firms as subject to the resolution authority would likely
be intertwined with steps led by the Fed and new Financial Stability Oversight Council to identify
companies covered by new systemic-risk regulations. Healthy systemically vital firms would have to
submit to regulators a detailed plan of how they would wind down in a failure scenario.
The FDIC will have a seat on the council, which may be helpful, Kini said. In addition, they
will be involved in the process of crafting living wills, which will serve as a road map for the
FDIC if they ever have to use the new authority under the statutory regime.
But some observers said there is a risk in too much pre-planning. Comizio said that, while it is
helpful to gather information about firms while they are healthy, the FDIC would need to be careful
not to pigeonhole itself into one type of resolution plan.
One of their main challenges is walking through the dance steps of resolution for the major types
of nonbank financial institutions, he said. The FDIC doesnt need to go into grim detail.
The agency would be doing itself a disservice to lock itself into any identified approaches right
now, Comizio said.
Theyre going to be given the authority, and then I think they need to give themselves enough
flexibility under the law to basically proactively respond to a situation where theyre going to be
called upon to exercise the authority.
Many experts agreed the FDIC has likely already assigned staff to begin preparing proposals.
My guess is theyve already had a task force internally working on this, Longbrake said. They
havent been sitting on their hands waiting for this bill to pass. ... They will have the ability
once the bill is signed to make some preliminary statements.
Yet the total permanent amount of staff required to run the new resolution operation would likely
be small, he added, since takeovers of systemically important nonbanks would be uncommon.
Generally, the way the FDIC runs the resolution authority is with a fairly small dedicated staff
which they can expand or contract, depending on the number of actual resolutions they have to
handle, Longbrake said.
I would expect a fairly small number of additional people. ... You dont have anything thats going
to fall in their laps. You can still reach back into the agencys resources that it already has in
the legal area and the liquidation area and the resolutions area, and draw on that expertise that
already exists.
Page 11 of 15
But the agency also faces the task of accounting for the resources it spends on running the nonbank
unit, which are separate from the reserves held in the Deposit Insurance Fund used for resolving
banks.
Under the bill, the agency would initially borrow funds from the Treasury and repay them from a
separate account funded by assessments from the largest financial firms.
Krimminger said there is a precedent for the agency utilizing different pots of resources. The FDIC
faced similar split accounting requirements when it resolved banks and thrifts separately out of
the Bank Insurance Fund and the Savings Association Insurance Fund. (Congress merged the two funds
under the 2006 deposit insurance reform law.)
Even today, resolution staffers working on a specific receivership must account for expenses and
compensation from the funds available in that receivership.
When our resolution staffs work on particular failures, they charge their time to those specific
receiverships, Krimminger said. We are very scrupulous now about making sure that our work is
charged to the right receivership. ... In the past, if you were working on something that was
SAIF-oriented, you would charge it to the SAIF. If you were working on something for the Bank
Insurance Fund, you charged it to the Bank Insurance Fund.
Top
2. |
|
Municipal Debt Levels Putting U.S. Banks at Risk as Local Budget Deficits Grow
By Dakin Campbell
July 6, 2010 Bloomberg News |
Citigroup Inc., State Street Corp. and U.S. Bancorp are among U.S. banks whose municipal bond
holdings have reached a 25-year high just as state budget deficits swell to $140 billion, the most
since the start of the recession.
Commercial lenders have added more than $84 billion to their holdings since 2003, according to the
Federal Reserve, pushing total investments to $216.2 billion at the end of the first quarter. Bank
regulators and ratings companies are ramping up scrutiny of banks most at risk of being forced to
raise more capital should debt prices slide.
There is a huge untold problem here, said Walter J. Mix III, a former commissioner of the
California Department of Financial Institutions who closed 30 banks during the last banking crisis
in the 1990s. The economics lead to the conclusion that there will be downward pressure on these
bonds.
At Cullen/Frost Bankers Inc., the biggest Texas lender, holdings of municipal debt exceeded Tier 1
capital, a key measure of a banks ability to absorb losses, by $491 million at the end of the
first quarter, data compiled by Bloomberg show. For State Street, based in Boston, the holdings
make up 50 percent of Tier 1 capital. U.S. Bancorp, the Minneapolis lender, has a ratio of 28
percent. Its 11 percent at Citigroup, the data show.
Default speculation drove municipal bond yields to a 13-month high relative to U.S. Treasuries in
the first half of the year. Now, the Federal Deposit Insurance Corp. has asked analysts to look
into the issue, according to spokeswoman Michele Heller.
Page 12 of 15
The 9.5 percent U.S. unemployment rate and slump in property prices have slashed local governments
ability to pay bills. Billionaire investor Warren Buffett, speaking at a June 2 hearing of the
Financial Crisis Inquiry Commission in New York, predicted a terrible problem for municipal
bonds. Buffett has said a U.S. state facing default may need a federal rescue.
Analysts and investors remain divided about the level of risk. Lenders hold just 8 percent of the
$2.8 trillion state and local government debt market, and municipal bonds are only about 2 percent
of total bank assets, according to the Fed.
The open issue is whether its a slowly emerging train wreck, said Jeff Davis, an analyst at
Guggenheim Securities LLC, a unit of Guggenheim Partners LLC, whose executive chairman is former
Bear Stearns Cos. CEO Alan D. Schwartz. Its hard to paint all general obligation and all revenue
bonds with the same brush. The portfolios wont go to zero.
Municipal defaults are a slender risk, according to Moodys Investors Service, which said in a
February report that the investment-grade rate during the past four decades was 0.03 percent,
compared with 0.97 percent for similar corporate issues. Investors eventually recoup an average of
67 cents on the dollar for defaulted municipal bonds.
While the historical default rate risk for municipal debt is below corporate obligations, sudden
declines in prices have already created losses at some banks.
Citigroup had an unrealized loss of $1.8 billion in the third quarter of 2008, when the municipal
market sank 3.8 percent, the biggest quarterly decline since 1994, company filings and Bank of
America Merrill Indexes show. The loss was deducted from the firms equity.
Citis exposure to the municipal market is of the highest quality, Danielle Romero-Apsilos, a
spokeswoman for the New York-based firm, said in a statement. We conduct rigorous stress tests
under a variety of scenarios and are comfortable with our position.
Citigroup had the largest municipal holdings among the biggest banks, with $13.4 billion of state
and local government bonds, according to FDIC call reports. Bank of America Corp. held $8.5
billion, Wells Fargo & Co. owned $7.6 billion and JPMorgan Chase & Co. held $4.5 billion. Each
accounted for less than 8 percent of Tier 1 capital, according to the FDIC.
Bank of America, based in Charlotte, N.C., has made significant progress boosting capital and
reducing risk-weighted assets, spokesman Jerry Dubrowski said. JPMorgan spokeswoman Jennifer
Zuccarelli didnt return a call for comment.
Wells Fargo, based in San Francisco, boosted its municipal holdings by more than $2 billion in the
first quarter, data compiled by Bloomberg show. The investments are in municipalities we know very
well, Chief Financial Officer Howard Atkins said on May 13.
State Street, the second-largest independent custody bank, owned $6.2 billion of state and local
government debt at the end of March, the data show. State Street is very comfortable with its
portfolio and has had no material credit issues, spokeswoman Carolyn Cichon said. At
Minneapolis-based U.S. Bancorp, which owned $6.6 billion of municipal bonds, spokeswoman Jennifer
Wendt also declined comment.
Page 13 of 15
Cullen/Frost, which says its the only one of the 10 biggest Texas banks to survive the 1980s
savings-and-loan crisis, is extremely comfortable with the municipal investments, CFO Phillip
Green said in a July 1 interview.
The 142-year-old lender, based in San Antonio, bought $1 billion of municipal bonds in the 12
months through February, Green said that month. Most were issued by Texas school districts and
insured by the states Permanent School Fund guarantee program, he said in last weeks interview.
Municipal debt gained 2 percent in the second quarter, underperforming Treasuries by 2.7 percentage
points, according to Bank of America Merrill indexes. In 2009, state and local government debt rose
14.5 percent.
U.S. states are likely to face $140 billion in cumulative budget gaps in the coming year, according
to the Center on Budget and Policy Priorities. Last year, 187 tax-exempt issuers defaulted on $6.4
billion of securities, the most since 1992, according to data from Distressed Debt Securities in
Miami Lakes, Fla.
Its a market where its clear that the underlying fundamentals are lousy, said Michael
Aronstein, chief investment strategist at Oscar Gruss & Son Inc., a New York- based brokerage.
People can say fundamentals dont matter but Ive been doing this for 32 years. They do.
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.
The Toronto-Dominion Bank and The South Financial Group, Inc. have filed with the SEC a
Registration Statement on Form F-4 containing a preliminary proxy statement/prospectus and each of
the companies plans to file with the SEC other documents regarding the proposed transaction.
Shareholders are encouraged to read the preliminary proxy statement/prospectus regarding the
proposed transaction and the definitive proxy statement/prospectus when it becomes available, as
well as other documents filed with the SEC because they contain important information.
Shareholders may obtain a free copy of the preliminary proxy statement/prospectus, and will be able
to obtain a free copy of the definitive proxy statement/prospectus when it becomes available, as
well as other filings containing information about The Toronto-Dominion Bank and The South
Page 14 of 15
Financial Group, Inc., without charge, at the SECs Internet site (http://www.sec.gov). Copies of
the definitive proxy statement/prospectus and the filings with the SEC that will be incorporated by
reference in the definitive 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,
its notice of annual meeting and proxy circular for its 2010 annual
meeting, which was filed with the Securities and Exchange Commission on February 25, 2010, and the
above-referenced Registration Statement on Form F-4, which was filed with the SEC on June 10,
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 2010 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, is contained in the above-referenced Registration
Statement on Form F-4, which was filed with the SEC on June 10, 2010, and other relevant materials
to be filed with the SEC when they become available.
Page 15 of 15
THE FOLLOWING IS A COMMUNICATION SENT TO EMPLOYEES OF THE TORONTO-DOMINION BANK ON JULY 7, 2010
1. DBRS confirms TD Bank ratings Investment Executive
DBRS Ltd. has confirmed its ratings on Toronto-Dominion Bank (TSX:TD) at AA and R-1 (high),
pointing primarily to the banks strong position in domestic retail banking. TD mentioned. See
full story
2. CIBC lowers 5-year mortgage rate, matching changes by its rivals National Post
Canadian Imperial Bank of Commerce announced yesterday a reduction in its mortgage rates. Its
benchmark five-year closed rate was to decline 10 basis points to 5.79%, effective today, matching
changes recently made by Bank of Montreal, Royal Bank of Canada and Toronto-Dominion Bank. TD
Canada Trust mentioned. See full story
3. TD Bank Pushes Totally Flat Debit Cards The Consumerist (blog)
Run your fingers over one of TD Banks new debit cards and youll notice something missing. Theres
no embossed numbers. Its not a fake, its the future: a completely flat debit card that can be
issued right on the spot when you open an account at a local bank, with no waiting for it to arrive
in the mail. TD Bank mentioned. See full story
4. First-time homebuyers in B.C. more likely to buy condos The Vancouver Sun
First-time homebuyers in British Columbia are opting for condominiums, not houses, unlike their
counterparts in much of the rest of the country, according to a report by TD Canada Trust. Barry
Rathburn (Mobile Mortgage Manager, TD Canada Trust) mentioned. See full story
5. City gets cash for carbon credits Guelph Mercury (ON)
The city has come across $1 million in found money. Mayor Karen Farbridge earlier this month signed
an agreement to voluntarily sell carbon credits to the Greening Canada Fund, which purchased them
on behalf of TD Bank and Bank of Montreal, two corporations which will use the credits to offset
their carbon footprints in an effort to become carbon neutral. TD mentioned. See full
story
6. Eco-friendly makeover at GSS Niagara This Week (ON)
Grimsby Secondary School (GSS) is planting a new look to the front of their school with some help
from the community. TD Friends of the Environment Foundation mentioned. See full
story
7. Le trio montréalais Parc X remporte le Grand Prix Jazz TD [The Montreal trio Parc X wins the TD
Jazz Grand Prize] La Presse
Lan dernier, le jury était divisé sur tout sauf sur un point: le Parc X Trio avait «quelque
chose», mais nétait pas encore «là». Et le jury a fait changer les règles du Grand Prix de Jazz TD
(TD depuis cette année) pour que Parc X puisse se réprésenter au concours. [Last year, the jury was
divided on everything except on one point: the Parc X Trio had something, but was not yet
there. And the jury changed the rules of the TD Jazz Grand Prize (TD beginning this year) that
can represent Parc X in the competition.] TD mentioned. Similar articles appear in 24 Heures
(Montreal) and Québec Hebdo. See full story
8. Manulife shares given a downgrade National Post (Bloomberg)
CIBC World Markets downgraded shares of Manulife Financial yesterday and cut earnings estimates for
Canadas insurance sector, citing weaker equity markets and bond yields. See full
story
9. La Banque Nationale devra verser 6 millions à ses clients [National Bank will pay $6 million to its clients] The Canadian Press
Il en coûtera 6 millions de dollars à la Banque Nationale du Canada pour avoir imposé à ses clients
des frais dutilisation pour certaines marges de crédit personnelles, un règlement qui ouvre toute
grande la voie à une série
de recours contre plusieurs institutions financières. [In regulation
that opens wide the door to a series of appeals against several financial institutions, it will
cost the National Bank of Canada six million dollars for imposing user fees on its customers for
certain personal lines of credit.] See full story
10. Citi names new head in Canada The Globe and Mail (Streetwise blog)
Its been a rough couple of years for Citigroup Inc. and its Canadian operation has been no
exception. See full story
11. Giant new niche player in Canada National Post
The head of the worlds biggest bank held a news conference in Toronto yesterday to announce the
launch of a Canadian subsidiary and to advise Canadas banks that Industrial and Commercial Bank of
China is here merely to build a niche market and not to eat their lunch. See full
story
12. Chinas AgBank sets richest IPO on record The Globe and Mail
When the Chinese government decided to begin taking its state-owned banks public nearly a decade
ago a move that would establish a new hierarchy among the worlds largest banks it held one of
them back. See full story
13. Le Québec et lAlberta ouvrent leur jeu [Quebec and Alberta being their game] Le Devoir
Discrètement, le gouvernement du Québec et celui de lAlberta ont transmis les premiers morceaux de
leur argumentaire à la Cour dappel du Québec, à qui ils demandent de se prononcer sur la
constitutionnalité du projet fédéral visant à créer une commission pancanadienne de valeurs
mobilières. [Discreetly, the Governments of Quebec and Alberta have provided the first pieces of
their arguments to the Court of Appeal of Quebec, as they call upon to rule on the
constitutionality of the federal plan aimed at creating a pan-Canadian securities
commission.] See full story
14. Consumers will spend despite HST: Report Toronto Sun
Consumers stung by the HST may not be in the mood for much shopping right now but any negative
long-term impact on their spending is likely to be quite moderate, a new TD Economics report says.
Derek Burleton (VP and Deputy Chief Economist) quoted.. Similar article in BC Local
News. See full story
15. Canadas gravity-defying jobs spurt likely coming back to earth, say economists The Canadian
Press
The key pillar of Canadas recovery the spectacular year-long jobs growth that had sustained the
consumer economy may finally be starting to crumble, analysts say. Derek Burleton quoted. Similar
article in Toronto Sun. See full story
16. FINDING A BETTER WAY TO GET THINGS DONE The Globe and Mail
For the 2,800 technicians and engineers at IBMs sprawling plant in the idyllic Eastern Townships,
finding new and better ways to operate isnt a luxury. Its a necessity. Craig Alexander
quoted. See full story
17. Cup success could give German economy a boost The Globe and Mail
When Germany takes to the field today in its World Cup semi-final game against Spain, most activity
in the European economic powerhouse will shudder to a stop. Stores will be empty and some factories
with evening shifts will change hours to accommodate workers watching the game. Richard Kelly (TD
Economics) mentioned. 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. DBRS confirms TD Bank ratings
Investment Executive
07/07/2010
JAMES LANGTON
DBRS Ltd. has confirmed its ratings on Toronto-Dominion Bank (TSX:TD) at AA and R-1 (high),
pointing primarily to the banks strong position in domestic retail banking.
The rating agency said Tuesday that TDs Canadian personal and commercial banking division
generated $2.5 billion of net income in 2009 and is expected to continue to provide earnings
stability. It notes that TD had a solid number one market share ranking in personal deposits and
number two in lending in Canada.
Its retail distribution network expansion, significantly longer hours of service relative to its
peers and relentless drive to improve customer service index scores are critical to the banks
franchise strength and have led to its successful growth in Canadian retail market shares,
including credit cards, property and casualty insurance, small business and commercial banking, it
says.
DBRS also says that TDs large retail operations contribute to its lower business risk profile than
some of its peers.
Where there is some risk is in the banks U.S. expansion efforts. DBRS notes that TD has been back
on the acquisition trail, buying The South Financial Group, and doing an FDIC-assisted acquisition
of three Florida banks, although it says that neither of these deals had an impact on TDs ratings.
Longer term, DBRS believes successful execution of TDs U.S. retail and commercial banking
strategy will contribute positively to the banks business franchise as it begins to generate
acceptable returns on invested capital for the bank and becomes a platform for further growth,
albeit with a degree of risk. The execution, however, remains a challenge, it says.
Moreover, it notes that the slowdown in the global economy has negatively affected loan loss
provisions in the U.S. and Canadian retail banking segments. Credit costs are expected to remain
elevated in the near term but manageable relative to the TDs earnings before loan losses and
taxes, it says.
Finally, DBRS says that while TD, and the other large Canadian banks, have increased their capital
ratios, potential changes to regulatory capital rules could negatively affect these ratios.
Nevertheless, it says that the bank has the ability to generate substantial levels of internal
capital to offset the effect of these changes, which are likely to be put into effect in fiscal
2013.
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to Top
2. CIBC lowers 5-year mortgage rate, matching changes by its rivals
National Post
07/07/2010
Pg. FP4
Canadian Imperial Bank of Commerce announced yesterday a reduction in its mortgage rates. Its
benchmark five-year closed rate was to decline 10 basis points to 5.79%, effective today, matching
changes recently made by Bank of Montreal, Royal Bank of Canada and Toronto-Dominion Bank.
Desjardins Group, a smaller player operating in Quebec and Ontario, announced mortgage reductions
yesterday in line with the bigger banks. As of yesterday afternoon, Bank of Nova Scotia was the
only one of the five biggest commercial financial institutions with five-year closed mortgages as
high as 5.89%.
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3. TD Bank Pushes Totally Flat Debit Cards
The Consumerist (blog)
07/07/2010
BEN POPKEN
Run your fingers over one of TD Banks new debit cards and youll notice something missing. Theres
no embossed numbers. Its not a fake, its the future: a completely flat debit card that can be
issued right on the spot when you open an account at a local bank, with no waiting for it to arrive
in the mail.
We covered this recently as part of another post but its so odd we thought it worth calling out on
its own.
TD Bank introduced the cards in 2007 as a pilot program and seems to have recently pushed them out
to ex-Commerce Bank locations and customers, which is how I noticed it when it came in the mail.
Theres really little reason for cards to be embossed these days because most transactions are done
by swiping. I think the only times recently someone did a rubbing of my card was a jitney cab and
Chinese food delivery boy.
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4. First-time homebuyers in B.C. more likely to buy condos
The Vancouver Sun
07/06/2010
FIONA ANDERSON
First-time homebuyers in British Columbia are opting for condominiums, not houses, unlike their
counterparts in much of the rest of the country, according to a report by TD Canada Trust.
Thirty-seven per cent of British Columbians who had either bought a home in the past two years or
planned to buy in the next two years said they had bought or intended to buy a condo, while there
were only 21 per cent of respondents across the country who had bought or were looking at condos.
In B.C. 36 per cent of respondents had bought or hoped to buy a detached home, while across the
country 58 per cent expected their first home to be a detached house.
In B.C. its all about lifestyle and affordability, said Barry Rathburn, manager of mobile
mortgage specialists withTD CanadaTrust on Vancouver Island.
People who want a condo often want to be near work or have a water view, or other amenities that
might not come with a house, Rathburn said. And the price of houses in places like Vancouver -
where the benchmark price for a detached home in June was close to $800,000 puts buying a house
out of reach for many families.
Rathburn believes, however, that outside the major urban centres more homebuyers would be looking
for houses. In Nanaimo, for example, first-time homebuyers are buying an equal mix of town houses
and condos, and some are buying small houses, he said.
But no matter where you are buying, a condo is a fabulous first home, Rathburn said. You get in
at a
reasonable cost, its close to rent and you have ownership.
And then, after owning a condo and building up equity, buyers can think of their dream home, he
said.
A lot of buyers make the mistake of wanting their first home to be their dream home, Rathburn said.
But saving up enough money for a down payment could take years. Even saving for five years which
26 per cent of first-time homebuyers in B.C. said they did or plan to do would mean saving about
$30,000 every year for a decent down payment on a $500,000 or $600,000 house.
How many people can save $30,000 a year? Rathburn asks.
Rathburn also thinks its a bad idea to spend too much time saving to increase the down payment.
Provided you have enough for a down payment, you should get into a home as soon as possible, he
said.
Because while youre saving, the value of homes is going up and interest rates are going up,
Rathburn said.
And youre trying to save faster than those things are going up.
So it turns into a game of catch-up, he said.
Some good news from the survey: British Columbians do their financial research, with 94 per cent
learning about mortgage options before signing on the dotted line and 93 per cent getting
pre-approved. But B.C. homebuyers are also the most concerned about being able to afford their
homes if interest rates rise, with 70 per cent citing that as a worry, compared to 59 per cent
nationally.
That worry may come from the fact that many buyers in recent years have opted for variable-rate
mortgages which move with the Bank of Canadas overnight rate, Rathburn said. But thats not to say
a variable mortgage, compared to a fixed-rate mortgage, isnt the way to go. It depends totally on
the preferences of the buyer, he said.
The online survey received 1,000 responses, 131 of them from B.C.
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5. City gets cash for carbon credits
Guelph Mercury (ON)
07/07/2010
GREG LAYSON
The city has come across $1 million in found money.
Mayor Karen Farbridge earlier this month signed an agreement to voluntarily sell carbon credits to
the Greening Canada Fund, which purchased them on behalf of TD Bank and Bank of Montreal, two
corporations which will use the credits to offset their carbon footprints in an effort to become
carbon neutral.
Detailed terms of the deal werent released by either the city or the Greening Canada Fund, which
is managed by Green Power Action. But both parties said the city will receive five annual
instalments worth an estimated $1 million total.
How much money the city actually receives really depends on how many credits we sell them each
year. They let us know how many credits we need to supply them at the beginning of each year, said
Bill Shields, the citys solid
waste resources supervisor of governance and compliance.
The city obtained the credits by capturing methane gas from the Eastview landfill site and
converting it into enough electricity to power an estimated 1,000 homes.
Methane gas is 20 times more powerful than carbon dioxide.
The city will likely use the money to upgrade technology at the Eastview landfill site.
We havent exactly decided yet, Shields answered when asked where the money will be spent. But
certainly the Eastview site is currently experiencing technical problems. So well use some of the
money to fix that.
Were just not getting the amount of gas we once thought we would be able to get.
Shields said the more gas thats captured, the more electricity is created. And that means more
carbon credits earned and sold.
Carbon trading isnt a regulated industry or compliance market in North America. U.S. lawmakers are
currently grappling with exactly how to curb carbon emissions a cap and trade method is an
option, as is a national energy tax.
Without a regulated market or exchange such as the proposed Chicago Climate Exchange the
measuring, pricing, buying and selling of carbon credits in North America is subjective.
Its a bit of an opaque market, said Gerry Rocchi, CEO of Green Power Action and manager of the
Greening Canada Fund. In the absence of a compliance market, most carbon credits are selling for
less than $10 per ton.
University of Guelph environmental economist Ross McKitrick said even in a regulated cap and trade
market, such as one that exists in Europe, the price for carbon credits fluctuates from pennies to
upwards of 30 euros.
McKitrick called the voluntary deal between the city and banks a symbolic gesture.
Theres no legal requirement to purchase credits of this kind, McKitrick said. Its free money
for the city. Its really just a public relations gesture (by the banks).
The nature of the fund is aimed at the small but growing good corporate citizens who seek to
reduce their own carbon footprint, said Canada Greening Fund spokesperson Brian Smith.
McKitrick lauded the efforts of the banks and city but said carbon trading alone doesnt do nearly
enough to curb carbon dioxide emissions.
If you look for something you can measure in terms of a thermometer, this is too small to show
up, McKitrick said. If youre hoping to demonstrate carbon trading can be done, good citizens can
accomplish that.
But McKitrick said much more stringent methods need to be in place in order to reduce emissions.
And that costs money.
Anything we can afford to do to reduce emissions is nibbling at the edges, McKitrick said.
Carbon dioxide is very expensive to control. The only way to do that is to scale back fossil fuel
consumption. And theres no government in the world that thinks theyre prepared to bite that
bullet.
HOW IT WORKS
City captures and uses methane gas to produce electricity
Engineers quantify tonnage of gas captured
City receives carbon credits for the gas captured in tons
City registers credits with carbon registry Coolaction.com
All carbon credits are given a serial number
Greening Canada Fund buys registered credits on behalf of investors TD Bank and Bank of Montreal
Banks retire or cancel the credits, which cannot be resold or reused, to offset carbon
emissions created through flights, travel or other means
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6. Eco-friendly makeover at GSS
Niagara This Week (ON)
07/07/2010
ALEX SOMMERVILLE
Pg. 1
Grimsby Secondary School (GSS) is planting a new look to the front of their school with some help
from the community.
On June 21, students from GSS along with 30 volunteers from the Niagara Environmental Corps,
Niagara Research and Horticulture Studies Divisions came together for their third and final day of
landscaping the front of the high school with various plants that are known to be found in the
Grimsby and Niagara area.
Students from the high school paired up with a volunteer from Niagara College and scattered around
the gardens to spruce up the front of the school in an effort to not only enhance the schools
appearance, but to also teach the students about the environment.
In addition to more than 100 volunteers, the three-day green up was made possible through the
financial and in-kind support from sponsors like TD Friends of the Environment Foundation, Fairview
Landscape and the Town of Grimsby.
Kerry Kennedy, Research Project Co-ordinator and Environment Co-ordinator of the Niagara
Environmental Corps, showed excitement about the final day of work and wished to thank various
organizations for their funding.
The Town of Grimsby has been incredible with support, along with TD Friends of the Environment
Foundation and Fairview Landscaping. We couldnt have done all this work without their help, said
Kennedy.
Dave Wyatt, head of the science department at GSS, walked through the yard supporting the students
working on the idea he had come up with a while ago.
I had this idea to make the school eco-friendly about two and a half years ago. Its not only
beneficial for the
school but for the community as well, said Wyatt of the iniative.
The Grimsby Secondary School principal, Jim Heywood, was also on site to view the new additions to
the school.
Its exciting, said Heywood. Ive always had a vision to spruce up the front of the school, and
after a lot of talking and planning, its finally happening.
The project was formed by a design competition in Niagara Colleges Landscape Technician program.
The plan includes low-maintenance native plant and tree species to create an educational space for
students and community members. The design also removed compacted turf grass which increases
absorption of rainwater and decreases storm water runoff to Forty Mile Creek.
This project is unique in that it includes college students, high school students and volunteers
who are dedicated to creating a healthy and educational environmental location, said Kennedy.
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7. Le trio montréalais Parc X remporte le Grand Prix Jazz TD [The Montreal trio Parc X wins the TD Jazz Grand Prize]
La Presse
07/07/2010
DANIEL LEMAY
Lan dernier, le jury était divisé sur tout sauf sur un point: le Parc X Trio avait «quelque
chose», mais nétait pas encore «là». Et le jury a fait changer les règles du Grand Prix de Jazz TD
( TD depuis cette année) pour que Parc X puisse se réprésenter au concours. Et gagner le Grand Prix
de Jazz TD qui leur a été remis hier avant le concert du Dave Brubeck Quartet, en clôture du 31e
Festival international de jazz de Montréal.
«On se proposait de lancer notre deuxième CD en décembre», sourit Gabriel Vinuela-Pelletier, le
pianiste de Parc X (comme dans Parc Extension, le quartier du nord de Montréal). «Mais fallait
trouver largent... Là, avec 50 heures de studio, on peut se concentrer sur la musique...» Approche
quapprouvent ses collègues Alex Lefaivre (contrebasse) et Mark Nelson (batterie).
«Parc X Trio, cest quatre personnes», a expliqué Michael Bourne de la revue Downbeat, le président
du jury. «Il y a trois musiciens plus cette quatrième personnalité collective qui les fait jouer
comme une seul unité créatrice.» Le jury a donné le Prix Étoiles Galaxie (5000$) pour la meilleure
oeuvre au tromboniste Darren Sigesmund pour Dance for Leila.
Les gars de Parc X, eux, ont aussi reçu 5000$, une proposition de licence pour un disque chez
Effendi, une bonne maison, 50 heures au studio Karma et des invitations pour 2011 au FIJM, à
Rimouski et à Zacatecas où ils ont bien hâte de se rendre.
Pour sa part, le multi-intrumentiste Don Thompson a reçu le prix Oscar-Peterson en reconnaissance
de «sa contribution au jazz canadien et la qualité de son art». M. Thompson joue du piano, de la
basse et des persussions en plus dêtre un «maestro» du vibraphone. Originaire de Vancouver, cette
icône du jazz canadiansest surtout fait connaître aux côtés du virtuose de la guitare jazz Sonny
Greenwich et du saxo Moe Koffman (1928-2001). M. Thompson enseigne depuis longtemps au Humber
College de Toronto. «Les mots me manquent... Le nom dOscar Peterson et mon nom sur le même
trophée, je peux à peine y croire.»
Dave Brubeck avait ouvert ce marathon, hier après-midi, en acceptant des mains dAlain Simard,
président du FIJM et fan fini du pianiste, la statuette du prix spécial Miles-Davis quon lui
remettait pour lensemble de sa carrière de six décennies. « Oh! its heavy» (cest lourd) a lancé
M. Brubeck, loeil vif, ajoutant dans le même
souffle: «Miles aussi était heavy...»
Et la salle de se bidonner avec ce monsieur généreux et attachant. «Jai entendu une de mes
vieilles pièces en arrivant ici et je me suis dit: pourquoi je ne joue pas du piano comme ça?» Et
Dave Brubeck a demandé quon fasse rejouer Mr. Broadway, pour montrer, en battant la mesure avec sa
main frêle, que sa signature à lui, cétait les superpositions de rythmes.
Dave Brubeck aura 90 ans en décembre. «Ce soir, je devrai porter une attelle», dira-t-il enfin en
montrant lannulaire de sa main gauche gonflé par une quelconque excroissance. «Lattelle glisse,
je ne peux jouer comme je veux.» La voix sétrangle et le vieillard finit par lâcher les mots qui
lui barrent la gorge: «Et ça me frustre...»
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8. Manulife shares given a downgrade
National Post (Bloomberg)
07/07/2010
Pg. FP4
CIBC World Markets downgraded shares of Manulife Financial yesterday and cut earnings estimates for
Canadas insurance sector, citing weaker equity markets and bond
yields. The unit of Canadas No.
5 lender, Canadian Imperial Bank of Commerce, cut its rating on Manulife to sector performer
from sector outperformer and lowered its 12-month share price target on the company to $19 from
$22. CIBC said that while economic growth does appear to be returning which would be a boost for
Manulife the brokerage remains wary of what has been a volatile stock in what is still a choppy
environment. Manulifes shares are down 62% since the end of 2007, under-performing peers Sun Life
Financial, Great-West Lifeco and Industrial Alliance. Canadian insurers posted generally strong
profits during the first quarter, but CIBC expects gloomier results when second-quarter results are
released later this month, as weaker equity markets hit the huge investments held by insurers. We
look for the significant declines in equity markets and interest rates to weigh on earnings for all
four companies this quarter, CIBC said, noting it has cut earnings estimates for all four.
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9. La Banque Nationale devra verser 6 millions à ses clients [National Bank will pay $6 million to its clients]
The Canadian Press
07/07/2010
LISE MILLETTE
Il en coûtera 6 millions de dollars à la Banque Nationale du Canada pour avoir imposé à ses clients
des frais dutilisation pour certaines marges de crédit personnelles, un règlement qui ouvre toute
grande la voie à une série de recours contre plusieurs institutions financières.
Les procédures en recours collectif contre la Banque Nationale avaient été amorcées en 2003 par
lUnion des consommateurs et une cliente de Montréal. Cette dame, Marie-Claude Bibaud, contestait
limposition de frais de 5$ aux utilisateurs de marges de crédit.
La Banque Nationale ne fait pas cavalier seul au chapitre des frais dutilisation, a indiqué
lavocat spécialisé en recours collectifs, Me François Lebeau. Cet avocat a oeuvré à cette cause
depuis le début et il soutient quà la même période, plusieurs recours collectifs similaires ont
été déposés.
À son avis, le dénouement du cas de Mme Bibaud laisse présager un sort semblable pour les autres
dossiers qui
portent sur la légalité des frais de crédit, par cartes ou marges, et sur des frais de
conversion pour les achats à létranger.
Selon lavocat, la question soulevée est lapplication de la Loi sur la protection des
consommateurs à des institutions financières qui relèvent des lois fédérales, notamment en matière
de communications et de publicité, incluant la divulgation des frais imposés.
De lavis de Me Lebeau, le tout se rendra en Cour suprême du Canada, qui devra trancher.
Les lois fédérales ne couvrent pas tout et de leur côté, les lois provinciales prévoient plusieurs
exigences. Le juge Gascon a conclu que la loi québécoise sappliquait aussi aux banques, qui
contestent, a-t-il expliqué.
Des recours qui embrassent large, ce que reconnaît lavocat spécialisé dans ce type de procédures.
"Ça touche à peu près tous les gens qui disposent dune carte de crédit ou dune marge (de crédit),
donc une très grande majorité des Québécois, a-t-il soutenu.
Lentente entérinée vendredi par le juge Clément Gascon, de la Cour supérieure prévoit le versement
dune somme de 99,15$ à quelque 48 000 clients québécois de la Banque Nationale qui, entre le 1er
juillet 2003 et le 30 avril 2005, ont payé des frais de 5$ pour lutilisation de leur marge de
crédit Marge Manoeuvre Protection.
LUnion des consommateurs se dit très satisfaite de la décision du juge Gascon. Me Lebeau précise
que la somme en litige dans le dossier est denviron 7 millions, ce qui est très prêt du règlement
conclu de 6 millions. La cible, presque atteinte, fait en sorte que les porteurs du recours
considèrent que justice a été rendue.
Les consommateurs concernés, qui sont toujours clients de la Banque Nationale du Canada, recevront
ce paiement directement, au cours du mois de septembre 2010, sans quils aient à entreprendre
quelque démarche que ce soit.
Il ne pouvait y avoir une meilleure manière daccéder à la justice, a souligné Me Lebeau.
Ceux qui ne sont plus clients devront déposer une réclamation dici le 31 octobre 2010.
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10. Citi names new head in Canada
The Globe and Mail (Streetwise blog)
07/07/2010
BOYD ERMAN
Its been a rough couple of years for Citigroup Inc. and its Canadian operation has been no
exception.
The company is selling its consumer-focused businesses such as credit cards and honing its focus on
banking companies, but that too has been challenging in Canada.
On the investment banking side, Citi has fallen far, pullling back lending while focusing on fixing
its global business.
Citi has all but dropped off the map as a merger adviser, going from a top-10 player in Canada
before 2007 to not even in the top 20 so far this year. In equity raising and debt issuance, the
bank has pulled off only a couple deals so far in 2010, according to ThomsonReuters, which tracks
dealmaking.
The man charged with changing that is a 25-year veteran of the firm, John Hastings.
On Tuesday, Citi named Mr. Hastings as its chairman, chief executive and country head in Canada.
Mr. Hastings was most recently in charge of managing the banks relationships with institutional
clients in the country, and has a background in commercial banking. Prior to that he was a managing
director charged with drumming up finance deals across various industries.
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11. Giant new niche player in Canada
National Post
07/07/2010
JOHN GREENWOOD
Pg. FP1
The head of the worlds biggest bank held a news conference in Toronto yesterday to announce the
launch of a Canadian subsidiary and to advise Canadas banks that Industrial and Commercial Bank of
China is here merely to build a niche market and not to eat their lunch.
Canada is one of the most important economies in the world, said Jianqing Jiang, chairman of
ICBC, which listed its shares in 2006 in the worlds largest initial public offering. As trade
between China and Canada takes off, ICBC hopes to act as a bridge for Chinese companies looking
to do business in this country and to do the same for Canadian companies, he said.
ICBC is not here to become competitors with the Canadian banks but is interested in co-operating
with them to serve its customers better, Mr. Jiang said.
Mr. Jiang made the comments as he announced the launch of ICBC Canada, a network of six branches in
Toronto and Vancouver acquired last year from Hong Kongbased Bank of East Asia.
The operation has about 10,000 retail and corporate customers but the bank says that business will
grow as bilateral trade between the two countries expands, especially now that the worlds most
populous country has become Canadas second-biggest trading partner after the United States.
On the retail side, ICBC is betting it can tap into the 1.4 million ethnic Chinese living in Canada
and 60,000 Chinese students attending Canadian high schools and universities.
Over the past few years the level of Chinese investment in Canada has taken off, especially in the
resource sector, with Chinese companies and investment funds snapping up minority stakes in a range
of companies, including a 17% stake in Teck Resources Ltd. of Vancouver for $1.74-billion and a
9.3% stake in oil-sands producer Syncrude Canada Ltd. for $4.65-billion.
In comments to media, Mr. Jiang referred to the growing relationship between the two countries and
strengthening political ties.
ICBC is one of four major Chinese banks, all among the worlds top 10, which have been revamped to
compete in the private sector.
Founded in 1984, ICBC went public in 2006 but remains under the control of the Chinese government.
It is the worlds largest bank by market value, with the lions share of its operations in China,
where it claims more than 200 million retail clients and four million corporate customers.
But it is expanding internationally and now has 175 branches in 22 countries, including Canada.
In 2009, it picked up a 70% stake in the Canadian subsidiary of Bank of East Asia, which at the end
of 2008 had total assets of $556-million.
ICBC plans to expand the branch network but it will also look to leverage its global Internet
banking platform.
Like the Canadian banks, Chinese banks largely avoided the financial crisis and thus benefited as
the major U.S. and European institutions that once dominated the sector retreated to their home
markets to nurse wounds acquired during the turmoil.
Critics charge that because of their legacy of government control, companies such as ICBC are
inefficient and often opaque in their disclosure.
According to Reuters, ICBCs portfolio of loans grew by a staggering 25% in 2009 as the Chinese
government encouraged lending as part of its economic stimulus strategy.
Profit grew by a respectable 16% last year but the concern is that some of those loans may come
back to haunt the bank if the Chinese economy takes a dip.
The bank appears to be run by government edict and its top executives are paid like senior
bureaucrats unlike the richly compensated chiefs of legions of failed institutions on Wall
Street and in London.
Mr. Jianqing took home only US$234,700 in 2008, according to Reuters.
That compares with US$19.9-million compensation handed to Jamie Dimon, chief executive of JPMorgan
Chase & Co.
ICBC IN CHINA AND CANADA
Industrial and Commerical Banks market capitalization: $227.8B
Number of employees globally: 389,827
Number of branches in China: 16,000
Number of retail customers: 200M
Number of branches in Canada: 6
Number of retail and corporate clients in Canada: 10,000
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12. Chinas AgBank sets richest IPO on record
The Globe and Mail
07/07/2010
GRANT ROBERTSON
Pg. B3
When the Chinese government decided to begin taking its state-owned banks public nearly a decade
ago a move that would establish a new hierarchy among the worlds largest banks it held one of
them back.
Agricultural Bank of China was a different breed of financial institution than its three siblings.
Founded in 1951 by Mao Zedong, AgBanks mandate was to cater to rural villages as well as the big
cities. By ensuring farmers could get loans, it was intended to be a social tool as much as a bank, helping to manage the gap between rich and poor.
But the last major bank in China to go public has now become the basis for the richest initial
public offering on record, a sign of the worlds voracious appetite to invest in the countrys
rapid and seemingly unrelenting growth.
Despite concerns about a possible property slump in China, investors anxious to use the bank as a
proxy for future growth in the Chinese economy helped push AgBanks IPO on Tuesday to $22.1-billion
(U.S.), when adding in over-allotment shares. The offering was hugely oversubscribed as eager
investors rushed to get in.
Until now, Industrial Commercial Bank of China (ICBC) held the record for the largest IPO in
history, after going public in 2006 for $21.97-billion. Next on the list, at $19.65-billion, is
Visa Inc.s 2008 IPO.
Expectations for the AgBank IPO have mirrored the debate playing out over Chinas economy. Early
proclamations figured the bank could fetch as much as $30-billion. But concerns about the impact of
an overheated property market, particularly in Chinas largest cities, dampened those hopes.
Still, demand from institutional investors rebounded enough to install AgBank as the new high-water
mark for IPOs. Chinese banks now account for three of the worlds 10 biggest IPOs.
The chairman of ICBC, who was in Toronto on Tuesday to announce the Canadian expansion of the bank, said the countrys goliath banking IPOs have been fuelled by investors desire for ways to take
part in Chinas rapid growth.
I think the world has their eyes on emerging markets, including China, ICBC chairman Jainqing
Jiang said in an interview. Whether it is correct to have a proxy for the Chinese growth rate by
investing in Chinese financial institutions, I think different people hold different views. ... I
think making China-related investments, or investing in China so as to see the benefits of the high
growth rate in China and other emerging markets, is a very right comment.
The offering values AgBank at about $150-billion, putting it fourth on the list of the worlds
largest banks by market capitalization. ICBC heads up that list at $209-billion, followed by China
Construction Bank and HSBC.
Despite efforts by the Chinese government to cool the overheated property market, the sector may be
on the verge of tumbling, which would send shudders through the countrys banks, according to
Kenneth Rogoff, a professor of economics at Harvard University,
Youre starting to see that collapse in property and its going to hit the banking system, Mr.
Rogoff, a former chief economist with the International Monetary Fund, said during an interview
with Bloomberg Television in Hong Kong. At the speed [Chinas economy] is growing, its going to
have bumps.
In Toronto, Mr. Jiang said he didnt put much stock in such dire predictions about China.
If we look back into the history, probably 15 to 20 years back, you will find that there were so
many people that were trying to make predictions about China. However, later developments turned
out to prove they have been making wrong predictions, he said.
So our response to the predictions is we dont spend a lot of words. We wait for a few years and
compare the fact to the predictions.
******
ICBCS FOOTHOLD
Industrial Commercial Bank of China chairman Jianqing Jiang was in Toronto on Tuesday to discuss
his banks expansion plans for Canada and met with The Globe and Mail to discuss his views on the
global banking sector.
ICBC, the worlds largest bank by market value, is establishing a foothold in Canada through its
purchase of six branches owned by the Bank of East Asia. It wants to court the growing number of
Chinese citizens and companies doing business outside China.
On Chinas yuan:
Recently China announced its policy change from pegging only to the U.S. dollar to pegging to a
basket of currencies. Countries around the world are very supportive of China changing its currency
policy. I think the currency reform in China is still going on. ... This will be a controlled
process and it will be gradual, instead of happening overnight.
On global bank regulatory
reforms
A very important aspect of this reform is capital requirements. Reform around capital requirements
involves two aspects: one is to raise the amount of capital, the other is to enhance the quality.
Both are very important for financial institutions. Tier-one, equity-based capital shall be the
highest priority.
On expansion of ICBCs branches in Canada :
We are still studying all the possibilities in the local market. So far we dont have a very
specific plan to grow our network significantly over the next couple of years.
Grant Robertson
******
Ranking the banks
Largest banks by assets
1. BNP Paribas$2.95-trillion
2. Royal Bank of Scotland
$2.68-trillion3. HSBC Holdings $2.36-trillion
4. Bank of America $2.34-trillion
5. Deutsche Bank $2.26-trillion
18. AgBank $1.3-trillion
29. RBC $644-billion
Source: Bloomberg
******
The biggest IPOs
Agricultural Bank of China, the countrys No. 3 bank by assets, priced shares in its dual Hong Kong
and Shanghai listing in an offering that will raise more than $22-billion according to preliminary
data, making it the biggest IPO in history.
TOP FIVE, GLOBALLY
1. Agricultural Bank of China* July 6, 2010 China $22-billion
2. ICBC Oct. 20, 2006 $21.97 China $21.97-billion
3. Visa Inc. March 18, 2008 U.S. $19.65-billion
4. NTT Mobile Communications Network Inc** Oct. 12, 1998, Japan $18.05-billion
5. Enel SpA Nov. 2, 1999, Italy $16.69-billion
|
|
|
* |
|
Preliminary data |
|
** |
|
Now known as NTT DoCoMo Inc. |
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13. Le Québec et lAlberta ouvrent leur jeu [Quebec and Alberta being their game]
Le Devoir
07/07/2010
FRANÇOIS DESJARDINS
Pg. B1
Discrètement, le gouvernement du Québec et celui de lAlberta ont transmis les premiers morceaux de
leur argumentaire à la Cour dappel du Québec, à qui ils demandent de se prononcer sur la
constitutionnalité du projet fédéral visant à créer une commission pancanadienne de valeurs
mobilières.
Les deux provinces, qui sopposent au projet de loi présenté ce printemps par le ministre fédéral
Jim Flaherty, ont fait produire plusieurs rapports dexpertise pour étayer leur thèse selon
laquelle lactuel régime de réglementation fonctionne bien et quil serait inutile pour Ottawa de
le centraliser.
La preuve
déposée par le procureur général du Québec
est si longue _ cinq rapports, des affidavits,
des études, etc. _ quelle fait 2253 pages en huit volumes dont lépaisseur totale est denviron un
pied.
Le régime canadien est constitué de 13 agences provinciales et territoriales, qui coordonnent leurs
actions par lentremise des Autorités canadiennes de valeurs mobilières. Ses défenseurs affirment
notamment que la Banque mondiale, pour ne nommer que celle-là, a déjà classé le régime canadien _
le seul des pays avancés à ne pas être centralisé
_ parmi les meilleurs du monde.
Même si la Constitution énonce que les valeurs mobilières sont de compétence provinciale, nombreux
sont ceux qui veulent la création dune agence centrale sous prétexte que les marchés
fonctionneraient mieux et que linvestisseur serait mieux protégé.
Ottawa a dévoilé son projet de loi à la fin du mois de mai, le soumettant immédiatement à la Cour
suprême pour un avis constitutionnel. Laudition aura lieu en avril 2011.
Laudition en Cour dappel aura lieu en janvier. Le gouvernement fédéral et lAssociation des
banquiers canadiens ont jusquau 31 août pour déposer leurs documents et affidavits. Le dépôt des
mémoires, pour toutes les parties, surviendra à lautomne.
Professeurs québécois et américains
Parmi les rapports dexpertise déposés par Québec et Edmonton figurent des avis de professeurs
universitaires tant du Québec que des États-Unis. Par exemple, le procureur général du Québec a
demandé une expertise à Stéphane Rousseau, professeur de droit à lUniversité de Montréal, et au
professeur Jean-Marc Suret, de lUniversité de Montréal, qui a déjà longuement réfléchi à la
question.
Québec a aussi commandé des rapports à Stephen Choi, de lécole de droit de New York University, à
Jonathan Macey, de Yale, et à Andrea Corcoran, une consultante américaine en matière de
réglementation.
De son côté, le gouvernement albertain est allé chercher Thomas Courchene, dont les écrits passés
comportent une analyse en profondeur qui remonte à 1986, à lépoque de la commission MacDonald sur
«lunion économique et les perspectives de développement du Canada».
À lépoque, M. Courchene concluait quil était «peu nécessaire de créer un organisme national
chargé de la réglementation ». Non seulement il na pas changé didée, mais il signale dans son
rapport dexpertise produit pour le gouvernement albertain que le basculement de ce champ de
compétence entre les mains du fédéral serait néfaste au modèle québécois.
Le Barreau du Québec, qui appuie le gouvernement Charest dans sa démarche, a lui aussi déposé sa
preuve. Elle est essentiellement constituée, pour linstant, dune analyse de la situation
canadienne par le Fonds monétaire international, des grands principes de lOrganisation
internationale des commissions de valeurs et dun classement de la Banque mondiale.
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14. Consumers will spend despite HST: Report
Toronto Sun
07/07/2010
Consumers stung by the HST may not be in the mood for much shopping right now but any negative
long-term
impact on their spending is likely to be quite moderate, a new TD Economics report says.
Immediately following the implementation of harmonization, overall consumer prices in Ontario and
BC are expected to rise by 1.5 percentage points, the report says.
Although prices will fall over the next three years, theyre expected to permanently stay 0.9%
higher in Ontario and B.C., due to the HST.
The report projects that consumers, having purchased what they could prior to July 1 to avoid the
HST, will hold back some of their spending for a while but will likely start opening their wallets
again by years end.
Those who beat the tax on major purchases such as new homes contributed to strong spending numbers
in the early part of the year.
As much as 10% of housing starts over the last year may have been individuals and companies trying
to beat the tax, the report says.
Were likely to see a payback in residential investment post HST and part of that is that given
the lead times that were given by the Ontario and BC governments, households and builders had an
opportunity to move ahead of the tax reforms, TD Deputy Chief Economist Derek Burleton said.
Its expected that the negative fallout from the HST will be strongest on the housing sector where
new homes over $400,000 are subject to a portion or the full tax, and where the cost of home
renovations, legal and real estate fees, and maintenance such as lawn care and snow removal are all
rising by 8%.
The TD report estimates that the HST will add $4,500 directly to the cost of a $650,000 new home.
The services related to buying a $400,000 home now comes with an additional $3,000 in tax.
Outside of the near-term payback in activity, we do expect a negative longer-term impact on new
home construction, the report says. But the impact will likely be minor as the majority of new
homes in Ontario are currently priced under $400,000.
While consumer prices in Ontario will see a permanent modest increase due to the HST, the average
household will experience only a slight increase in the cost of living of $75 per year, it says.
As the temporary (HST rebate) expires, the economic benefits of the HST, which include stronger
employment and income gains, are expected to help offset the rise in these extra costs, the report
concludes.
Both Ontario and BC harmonized their sales tax on July 1, and since the two provinces make up 50%
of overall Canadian economic activity, TD economists say the impact will ripple through the whole
economy.
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15. Canadas gravity-defying jobs spurt likely coming back to earth, say economists
The Canadian Press
07/07/2010
JULIAN BELTRAME
The key pillar of Canadas recovery the spectacular year-long jobs growth that had sustained the
consumer
economy may finally be starting to crumble, analysts say.
With almost all economic indicators trending downwards in recent months, the last domino to fall
may be employment, ending a run of solid job creation that began last July.
Since that month, the Canadian economy created 310,000 jobs, recouping three quarters of the jobs
lost during the painful 2008-2009 recession.
Growth came mainly from housing and construction, the public sector and a recovery in
manufacturing, but the jobless rate remains stubbornly high at 8.1 per cent and shows little sign
of improvement.
The first signs of a slowdown actually came in May, but at a 25,000 pick-up that was only
disappointing when compared to the whopping 109,000 gain of April.
But now economists surveyed expect even Canadas labour market will take a breather when Statistics
Canada announces its jobs report for June on Friday. And if not this month, then next.
The consensus is for a 15,000 growth in the number of jobs added to the economy, which would be the
lowest since December. Some economists wouldnt be surprised if the economy actually sheds jobs in
June.
Very few economists are sticking their necks out on this one, said Derek Holt, vice-president of
economics with Scotia Capital.
My gut is well see the pace of job creation in the second half this year slow. We had that very
short-lived V-phase (recovery) in the U.S. and Canada and that was driven by a bunch of one-off
factors and is simply not sustainable.
Traditionally seen as a lagging indicator, Canadas employment record has surprised with not only
the strength of the rebound from recession, but also by how quickly. Employment gains began not
after output improved, but coincidentally.
The Canadian jobs growth since last July of 310,000 jobs is the equivalent of about 3.5 million
jobs if they occurred in the U.S., where the employment market remains stalled and the jobless rate
approaches 10 per cent.
The Canadian employment growth has coincided with the economy expanding by 4.9 per cent in the last
three months of 2009, and by a decade-best 6.1 per cent in the first quarter of 2010.
Since then, however, economic indicators have returned to earth. Consumer spending, housing, auto
purchases and exporters have all come in lower than expected.
Economic output began the second quarter with a surprisingly flat April reading, following strong
gains of 0.6 per cent in March and 0.5 per cent in February.
Tuesday brought fresh evidence that the soaring economic growth of the latter part of a 2009 and
early 2010 is indeed returning to earth, with a report showing the value of building permits fell
10.8 per cent in May.
In big Canadian cities like Vancouver and Toronto, the resale housing market has also been squeezed
by rising mortgage rates, sluggish consumer sentiment and relatively flat income growth.
Analysts say it is unlikely employment can buck the trend for long, especially with global growth
also moderating and concerns of further softening once governments move from spending to restraint.
I do think the risks are tilted to the downside with this months report, said TD Bank economist
Derek Burleton. Given the run weve had we could see a payback, and we are seeing economic growth
moderate.
Although economists wouldnt be surprised if Statistics Canada finds jobs were lost last month, it
would still cause somewhat of a shock to markets, especially since Canada has been one of the
strongest performers among advanced economies.
This would add to the growing list of indicators suggesting growth is slowing significantly, and
add to the talk of a double-dip recession, he said.
It would also give Bank of Canada governor Mark Carney another reason to pause later this month
after breaking ranks with other G7 countries last month by raising interest rates one-quarter
point.
Analysts had expected Carney to follow up Junes hike with a similar increase on July 20, but given
the uncertainty in Europe, gathering clouds over the global economy and Canadas own economic
slowdown, that sure bet has turned into a coin flip.
Bank of Montreal economist Michael Gregory says the consensus remains that Carney will take the
policy rate to a still low 0.75 per cent, then pause throughout the fall.
If he does, it will have virtually no impact on the economy or real-world interest rates, said
Holt. He notes that even as the Bank of Canada is in a tightening mode likely to raise borrowing
costs further longer-term interest rates are actually declining as the market makes its own
assumptions about the economy.
In the past few days, several banks lowered some of their mortgage rates by a tenth of a percentage
point.
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16. FINDING A BETTER WAY TO GET THINGS DONE
The Globe and Mail
07/07/2010
JEREMY TOROBIN
Pg. B1
For the 2,800 technicians and engineers at IBMs sprawling plant in the idyllic Eastern Townships,
finding new and better ways to operate isnt a luxury. Its a necessity.
Every product the Bromont, Que., factory makes quickly becomes obsolescent which means the plant
must constantly adapt to new technologies and apply new skills if it is to survive.
The factory, 75 kilometres east of Montreal, started out in 1972 making Selectric typewriters.
It has worked its way up to become IBMs biggest facility for testing and assembling advanced
microchips. Its products go into the planets most popular video-game consoles and fastest
supercomputers.
Arch-rivals Sony, Microsoft and Nintendo entrust the Bromont plant with testing and assembling the
ultra-powerful microchips that go into the PlayStation 3, Xbox 360 and Wii.
Thats like Coke and Pepsi using the same lab to test their formulas.
IBM has provided a solid foundation for the factorys success, having invested nearly $1.3-billion
in the Bromont
plant since its founding. Still, manufacturing director Ray Leduc argues that its a
combination of relentless training and an egalitarian philosophy that has allowed the Bromont plant
to boost its productivity while cutting costs and keeping its head count stable through the
recession.
We dont compete on labour rates, we compete on skill, on innovation, on time to market, said Mr.
Leduc, a veteran from the typewriter days, who was appointed last year to be a part-time adviser to
Canadas National Research Council.
A Formula 1 driver is also a machine operator. Thats the model we use: We take a very
sophisticated piece of equipment that costs a lot of capital, and we give it to a very highly
skilled person in whom weve invested a tremendous amount of development, and have them run it
better than anybody in the world.
Bromonts high-performance model could provide clues into how to increase labour productivity in
other parts of Canadian industry. Bank of Canada Governor Mark Carney has repeatedly warned that
Canada must boost its output if we are to maintain our standard of living in the face of foreign
competition and an aging population.
Mr. Carney notes that productivity growth declined during the recent recession, the first time that
has happened in three decades. Productivity usually grows during slowdowns because companies are
forced to do more with less.
Canadians dont understand how productivity relates to them, and as a result it has a bad
connotation, said Craig Alexander, chief economist at Toronto-Dominion Bank. But productivity
ultimately means Canadians being able to have a better standard of living ... Its the most
fundamental thing in terms of the economy, and the really discouraging thing is Canadas
performance over the last decade-and-a-half has been absolutely atrocious.
While Canadas productivity has crept ahead by only about 0.7 per cent a year during the past
decade, managers at Bromont say their ability to harness the creativity of their work force has
allowed some units to boost productivity by an impressive 10 per cent or more a year.
An important part of the plants productivity recipe is a constant emphasis on looking for new and
better ways to do things. In an average year, the plants innovative practices result in 12
patents, usually in advanced areas of microtechnology.
Another element of the Bromont formula is maintaining a stable, happy work force. The plant has
gone through constant, sometimes radical transformations with many of the same people. Turnover is
a mere 1 to 2 per cent a year, compared with rates closer to 20 per cent at Asian manufacturers.
In a lot of places in southeast Asia theres the operators, theres the engineers, theres the
management, and its very hierarchical, Dave Danovitch, the plants chief engineer, said. Here,
we try to eliminate the hierarchy and get these people together to listen to what theyre saying
and respect each others ideas.
Regular meetings infuse staff with Japanese ideas such as kaizen, which emphasize brainstorming and
continuous small improvements. Employees are encouraged to bring their ideas to management.
For instance, one of Bromonts many patents came after three employees huddled together to solve a
problem they ran into when they were testing thumbnail-sized chips. The traditional pieces used to
hold the modules in the test bed couldnt adjust for slight differences in size from part to part,
which resulted in the tester rejecting potentially good parts.
The team came up with a self-centring, spring-loaded concept, which, after several trials and
designs, was able to solve the problem using such a novel approach that IBM decided to seek patent
protection.
It really is from the employee base up, said Maureen Jodoin, Bromonts controller. Everyone on
that floor is a
problem-solver.
People in the plant receive an average of five days a year of formal training in skills
development, but that figure doesnt include on-the-job training. IBM encourages staff to take on
new roles and responsibilities.
A program dubbed three by 10 aims to have employees responsibilities change three times every 10
years. You get more efficient problem-solving, and more efficient team-working, because you know
the impact an idea of yours might have on another group, said Claire Langan, manager of
innovation, who is an embodiment of the program, having held 10 different jobs in her 28 years at
the plant.
Andrew Reid, founder of Toronto-based corporate training firm Big Fish Interactive, says companies
of all sizes stand to benefit from fully engaging their employees.
One of the greatest competitive edges a company can give themselves, especially these days, is
getting each staff member to see their role in contributing to positive change, Mr. Reid said.
Theres a massive difference between just doing the job and being a high-performance culture.
****
HARNESSING BRAINPOWER
IBM is teaming with Dalsa Semiconductors Ltd., Sherbrooke University and the federal and provincial
governments to build a centre that will focus on a new generation of microtechnology.
The centre, to open next year in Bromont, will harness university brainpower, says Normand
Bourbonnais, Bromonts technology development director. It will aim to speed up development of
applications such as 3-D technology that could be used to help find and treat cancers and other
diseases, he said.
Theres unbelievable knowledge in the universities and the network of research associations that
we have in Canada, but these guys dont know what are the real problems that were facing because
we dont work with them, he said. So they work on stuff that they believe is important, and it is
- it may become a product in 10 years or 15 years from now. With this centre, what we want to do is
bring researchers right with us so they start working on projects that we need in five years.
About 250 people will work at the centre, including 200 postgrad students who will rotate through
over five years.
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17. Cup success could give German economy a boost
The Globe and Mail
07/07/2010
RICHARD BLACKWELL
Pg. A12
When Germany takes to the field today in its World Cup semi-final game against Spain, most activity
in the European economic powerhouse will shudder to a stop. Stores will be empty and some factories
with evening shifts will change hours to accommodate workers watching the game.
In the short run, Germanys productivity could take a hit. But if the team does well and makes it
to the final, the euphoria that will sweep the nation could actually give its moribund economy a
shot in the arm.
With [economic spending], a big part is psychology, said Rolf Bürkl, an economist with
German-based market research firm GfK Group. Consumption starts in the mind. If [Germany] wins the
Cup, it will boost good feelings and this may help [increase] private consumption.
Since Germany is the largest economy in Europe, World Cup-induced growth could have spinoff effects
on the whole continent, Mr. Bürkl said from his office in Nurnberg.
Some of the economic benefits from the World Cup excitement are predictable and concrete, such as a
jump in sales of flat-screen televisions. Its also no surprise that business in bars and
restaurants in Germany takes a jump, because everybody goes out, said Tuuli McCully, a senior
economist in the international research group at Scotia Capital in Toronto. But there are
intangible benefits too, she said, if the team wins. Its such a big thing, especially for the
Germans. ... It improves the mood and excitement, which will be reflected in sales.
A University of Bonn study conducted during the 2006 World Cup showed that Germanys strong
performance in that years tournament it finished third ratcheted up the publics perceptions
of the strength of the economy substantially.
This years strong showing could also help light a fire under the German economy, said Thomas
Dohmen, one of reports authors.
Not everyone, however, is convinced a strong World Cup performance is enough to jolt Germanys
economy back to life.
There may be some slight improvement in consumer confidence, but in terms of a tangible impact
youre going to see in GDP, theres nothing thats going to pour in there, said Richard Kelly,
senior global strategist at Toronto-Dominion Banks office in London, England. Its a minor issue
from the grand perspective of the economy.
What really drives consumer spending is disposable income, Mr. Kelly said. While World Cup euphoria
may make people feel good, there wont be a big economic impact if people havent got any more
money to spend, he said.
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