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 August 20, 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 THE TORONTO-DOMINION BANK ON AUGUST 20, 2010
1. CANADA WINS OVER BASEL; Committee endorses idea of converting bank debt into equity in
rescue National Post
Canadas push to have bank debt converted into equity in the event of a government rescue has won
over global banking regulators, who yesterday said it could be part of a suite of financial reforms
up for approval by Group of 20 leaders at their summit in November. See full story
2. A growing appetite at TD FST Financial Services Technology
As the Senior Vice President of the Online Channel at TD Bank Financial Group, Paal Kaperdal leads
the team responsible for creating a legendary online experience for TDs 11 million customers. His
teams vision is simple: to be a world-class financial destination. Not an easy feat, acknowledges
Kaperdal, but Its a journey that will be a top priority for TD over the next few years. Paal
Kaperdal (SVP, Online Channel) quoted. See full story
3. First Niagara agrees to buy NewAlliance Bancshares Financial Times
First Niagara, a New York bank, on Thursday agreed to buy another north-east based lender,
NewAlliance Bancshares, in the largest unassisted US bank deal since the financial crisis. TD
mentioned. See full story
4. Big Bank Deal Signals More to Come The Wall Street Journal
First Niagara Financial Group Inc. agreed to acquire NewAlliance Bancshares Inc. for $1.5 billion
in the biggest takeover of a U.S. bank since late 2008. See full story
5. Caisse adds $4.1B in value National Post
Despite turbulent markets overseas, the Caisse de depot et placement du Quebec has avoided the
worst of the fallout. The pension fund said yesterday it has added $4.1-billion in value for the
first half of 2010, a sign that Canadas largest pension fund has weathered the worst of the storm.
See full story
6. Caisse de dépôt Ce nest quun début ! [Caisse de depot This is just the beginning!] Le
Devoir
Pour les six premiers mois de 2010, la Caisse de dépôt et placement du Québec a obtenu un rendement
de 2,3% comparativement zéro pour la même période de lannée dernière, et à -0,7% pour lindice
comparatif du marché. [For the first six months of 2010, the Caisse de depot et placement du Quebec
has obtained a yield of 2.3% from zero for the same period last year, and -0.7% for the comparative
index of market.] Editorial by Jean-Robert Sansfaçon. See full story
7. Sticking Banks With the Bill The New York Times
If nobody does their job right, and disaster ensues, who should pay for the sins of all? That is
the predicament now confronting the mortgage industry, where it has become clear that many billions
of dollars in home loans were sold, guaranteed and rated as safe without anyone bothering to
examine whether the loans were made with due regard for the rules. See full story
8. BofA and Visa to test cell phone payments Reuters
Bank of America Corp, the largest U.S. consumer bank, and Visa Inc, the worlds largest payment
processor, plan to begin a test program next month that lets customers use smartphones to pay for
purchases in stores. See full story
9. Canadas banks offer better prospects than lifecos: UBS Investment Executive
UBS Securities Canada Inc. initiated research coverage of the Canadian life insurance sector with a
cautious stance on Thursday, indicating that, in the current climate, it prefers the banks. See
full story
10. Fed may need to buy more U.S. treasureies: Bullard Reuters
The Federal Reserve may need to ramp up its purchases of U.S. treasury debt if price levels in the
U.S. economy
continue to show signs of softening, St. Louis Fed president James Bullard said
yesterday. See full story
11. Businesses tap BDC for record loans The Globe and Mail
Canadian entrepreneurs and small businesses took out more loans from Business Development Canada
last year than at any other time in the agencys 65-year history, to cover projects for which even
firms with good credit couldnt get bank financing during the financial crisis. See full story
12. Literacy a key to economy The Lethbridge Herald (AB)
Its not surprising that a new poll conducted for ABC Life Literacy Canada indicates most Canadians
- a whopping 95 per cent agree that literacy training is crucial to improving job prospects.
Craig Alexander quoted. 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. CANADA WINS OVER BASEL; Committee endorses idea of converting bank debt into equity in rescue
National Post
08/20/2010
PAUL VIEIRA
Pg. FP1
Canadas push to have bank debt converted into equity in the event of a government rescue has won
over global banking regulators, who yesterday said it could be part of a suite of financial reforms
up for approval by Group of 20 leaders at their summit in November.
The so-called Basel Committee on Banking Supervision endorsed the idea of embedded contingent
capital in documents published yesterday, and asked stakeholders to comment on its possible
implementation by Oct. 1.
Under contingent capital, banks would insure themselves against failure through the issue of debt
that could be converted into equity at the time of any possible failure. The conversion would occur
at the behest of federal authorities, on the belief the company cannot be saved without government
intervention. The underlying idea is that bank equity and debt holders have an added incentive to
monitor lending practices.
The Basel Committee concurred, and is prepared to include the idea in its list of banking reforms
that G20 leaders will be asked to endorse at a summit in Seoul.
The increased downside risk will provide an incentive for the investors in capital instruments to
monitor the risks taken by the issuing bank, said the committee, which represents central banks
and regulators in 27 countries and sets capital standards for banks worldwide. If a bank takes
more risk, and the risk of loss to investors increases, buyers of existing instruments ... will
demand a higher coupon. This sequence of events should help impose additional market discipline on
banks.
Federal Finance Minister Jim Flaherty said last night he was pleased the Basel Committee was
prepared to head
Canadas advice.
Canada continues to play a lead role in focusing financial reform discussion on the core issues of
quality, and quantity of capital, Mr. Flaherty said.
Julie Dickson, head of Canadas banking watchdog, the Office of the Superintendent of Financial
Institutions, pitched this idea in an April piece for the Financial Times as Canada and Europe were
locked in a fierce debate over the merits of a global bank tax.
Canada vehemently argued against the levy, saying its lenders shouldnt be punished as they were
not responsible for sparking the credit crisis.
Contingent capital was put forward as an alternative for G20 countries to consider and that
happened, as G20 members eventually cooled to the idea of a levy. At the G20 leaders summit in
Toronto in June, it was agreed individual countries could pursue a bank levy is they desired but no
global levy would be pursued.
In its paper, the Basel Committee said the scheme should help in reducing moral hazard, or the
implicit belief risky
bank lending can proceed because governments are prepared to backstop lenders should they backfire.
The Basel Committee said moral hazard is seen by some as an underlying cause of the current
financial crisis and a potential cause of future crises. (Mark Carney, the Bank of Canada governor
and chairman of a key global committee of central bankers, has repeatedly warned the global economy
remains awash in moral hazard.)
News of the Basel Committees endorsement drew concerns from some banking observers. Regulators are
proposing an instrument thats very different from what we have now and theres no standard
investor base to buy it, Oliver Judd, an analyst at Aviva Investors, told Bloomberg News. There
needs to be some form of liquid market out there for investors to be willing to buy and that simply
doesnt exist.
The Canadian Bankers Association raised similar warnings. We need to carefully consider the cost
and marketability of such an instrument, particularly in a smaller market like Canada, the lobby
group said in a statement. Ultimately whats important to banks in Canada is ensuring stability in
the financial sector and good risk management.
Canadian banks have roughly $16.5-billion of so-called subordinated and other innovative capital
outstanding. If contingent capital is not part of the final banking rules, some observers argue,
this could force Canadian banks to raise additional capital to meet new stringent rules governing
capital levels and liquidity standards.
Return to Top
2. A growing appetite at TD
FST Financial Services Technology
08/20/2010
As the Senior Vice President of the Online Channel at TD Bank Financial Group, Paal Kaperdal leads
the team responsible for creating a legendary online experience for TDs 11 million customers. His
teams vision is simple: to be a world-class financial destination. Not an easy feat, acknowledges
Kaperdal, but Its a journey that will be a top priority for TD over the next few years.
The integrated Online Channel team was formed in November 2009 to support TDs customer-facing
businesses: personal and commercial banking in Canada and the U.S., insurance, and wealth
management. Since then,
theres been a noticeable impact on TDs digital footprint with the most
recent initiative being mobile banking.
Launched in April 2010 in the Canadian market, the TD mobile app for iPhone and iPod touch was
downloaded by more than 100,000 customers in just over a week. A short time later, TD expanded its
offering to include a mobile app for BlackBerry and Android devices making TD the first financial
services provider in Canada with mobile apps for the most in-demand smartphones.
Were seeing double-digit increases in the number of smartphone users and more than half of active
mobile bankers use smartphones, so this presents a terrific opportunity for financial institutions
to engage their customers in new ways, says Kaperdal. The mobile market has changed significantly
and quickly. We used to have to focus our energy on creating multiple wireless operator
relationships while supporting lots of mobile devices, including those from single device
manufacturers. Now, were able to devote our resources to key devices such as iPhone, BlackBerry,
and Android that clearly command the lions share of the smartphone market.
Smartphones have become full functioning computers with GPS and location awareness, innovative
touch input, a high-quality camera, and even a check image scanner for bankers. Plus, were seeing
a host of other features that will guarantee future innovation in financial services, continues
Kaperdal.
The introduction of the iPhone and the creative relationship Apple struck with AT&T is a key
turning point that unlocked the potential of mobile financial services. Combined with the creation
of the iTunes app store, Apple demonstrated how an expanded ecosystem that combines hardware,
software, and a robust application development community would accelerate the smartphone market.
Some would say that Apple controls too much of the ecosystem, even down to the user experience and
which applications can be distributed in the iTunes store. That may be the case. At this stage
Apples approach is injecting a healthy focus on quality and a consistent user experience that
customers clearly embrace. In contrast to the Apple approach, were seeing the Android market
bringing a unifying operating system to diverse device manufacturers. Whatever model you prefer,
smartphones will have significant impact on how companies like TD engage our customers in the
future, adds Kaperdal.
As the industry begins to quantify the opportunity mobile banking provides, we cant lose sight of
the fact that the mobile phone remains with the customer all the time. This means the ability to
interact with the customer just went way up, Kaperdal continues. Mobile banking opens doors to
many self service options and could very easily become a cross channel enabler, not to mention the
promising potential of mobile payments and mobile commerce. We know this is where the financial
services industry is going and we want to be a leader in this space.
When it was first introduced, the industry would say online banking is a game changer because
customers could do their banking anytime and anywhere. This wasnt entirely true. We should have
been saying anytime and anywhere as long as you can get to a computer. The anytime, anywhere
tagline was beyond its years, but now with mobile banking, I think weve found it a new home.
Return to Top
3. First Niagara agrees to buy NewAlliance Bancshares
Financial Times
08/20/2010
HELEN THOMAS
First Niagara, a New York bank, on Thursday agreed to buy another north-east based lender,
NewAlliance Bancshares, in the largest unassisted US bank deal since the financial crisis.
Combining the two lenders will create a bank with more than $29bn in assets and $18bn in deposits.
That would put it among the top 25 US banks, the companies said.
While the Federal Deposit Insurance Corporation regularly sells off distressed banks to their
rivals, by agreeing to share losses on troubled assets, virtually no strategic banks deals have
been struck since late 2008.
This year, Canadas Toronto-Dominion Bank said it would buy South Financial Group, a troubled US
lender, without the assistance of the FDIC.
However, in that deal the US Treasury agreed to take a loss on its investment in the bank through
the Troubled asset relief programme, in effect helping the buyer in the transaction.
In contrast, First Niagara and NewAlliance have cleaner balance sheets than some rivals.
What I think is very compelling most compelling about this transaction is that we are putting
two very strong organisations together, said John Koelmel, First Niagara chief executive.
Gerard Cassidy, analyst at RBC Capital Markets, said: this transaction plays into our thesis for
an improved traditional M&A environment as the year progresses, potentially leading to several
high-profile deals in 2011.
Mr Cassidy added that he expects banks to use acquisitions to supplement earnings growth and expand
their balance sheets in the face of weak loan demand and pressure on pricing.
NewAlliance shareholders can choose to receive cash or stock, or a mixture of the two, worth 1.1
First Niagara shares. The offer was worth about $14.09 per share as of Wednesdays close, a 24 per
cent premium. Based on Wednesdays close, the deal values NewAlliance at about $1.5bn.
On Thursday, shares in Connecticut-based NewAlliance rose 12.5 per cent to $12.78. Shares in First
Niagara, which has a market value of about $2.5bn, fell 6.49 per cent to $11.95.
The combined bank will have 340 branches across Connecticut, Massachussetts, Pennsylvania and
upstate New York.
Return to Top
4. Big Bank Deal Signals More to Come
The Wall Street Journal
08/20/2010
ROBIN SIDEL
Pg. C1
First Niagara Financial Group Inc. agreed to acquire NewAlliance Bancshares Inc. for $1.5 billion
in the biggest takeover of a U.S. bank since late 2008.
Thursdays deal between the two healthy financial institutions triggered speculation that a
long-awaited wave of consolidation is about to begin among banks still standing after the recession
but grappling with sluggish loan growth and new regulations that will bruise industry profits for
years.
When the industry heals itself a little bit further, we will see a lot of other deals, says John
Duffy, chief executive of investment-banking firm Keefe, Bruyette & Woods Inc., which specializes
in financial institutions.
The 7,932 banks and savings institutions now scattered across the U.S. likely will shrink to about
5,000 within the next decade through mergers and failures, Mr. Duffy predicts.
Dont expect a sudden flood of deals. Bankers and analysts say deal making probably wont
accelerate significantly until next year because many buyers and sellers still are hobbled by bad
loans and economic uncertainty. Some banks are stuck on the sidelines until they repay
taxpayer-funded capital infusions received as part of the U.S. governments Troubled Asset Relief
Program.
Mergers of healthy banks have been rare since the financial crisis erupted. Banks such as J.P.
Morgan Chase & Co. and U.S. Bancorp that sidestepped the worst of the industrys mess generally
have preferred to buy failed institutions on the cheap, instead of paying up for banks still in
business.
A total of 250 banks and savings institutions have failed since the start of 2009, according to the
Federal Deposit Insurance Corp.
We have been hearing from an increasing number of management teams that more banks are willing to
have conversations about potential deals, Ken Zerbe, a banking analyst at Morgan Stanley, wrote in
a report to clients.
First Niagara and NewAlliance arent household names beyond their home turf in the northeastern
U.S., but both companies are considered well-run and comfortable making acquisitions. The two banks
also benefited from the regions economy holding up better than other parts of the U.S.
NewAlliance, based in New Haven, Conn., didnt accept any TARP funds; First Niagara, of Buffalo,
N.Y., repaid last year the $184 million it received from the government.
We have a distracted, diverted competitive landscape, and we want to seize the opportunity rather
than let things settle down and sort themselves out, John Koelmel, First Niagaras president and
chief executive, said Thursday.
Among other potential deals, Spains Banco Santander SA, which bought Sovereign Bancorp in January
2009, is in discussions to buy M&T Bank Corp., also based in Buffalo, according to people familiar
with the matter.
A spokeswoman for Sovereign and spokesman for M&T declined to comment.
First Niagara and NewAlliances cash-and-stock deal would catapult the combined company into the
top 25 U.S. banks by assets. After the takeover is completed, First Niagara will have $29 billion
in assets and more than 340 branches in New York, Pennsylvania, Connecticut and Massachusetts. Its
biggest rivals will include J.P. Morgan, Bank of America Corp. and PNC Financial Services Group.
Size does matter to the extent it better positions us, and to better enable us to win in more
situations, and ultimately thats what were trying to do, Mr. Koelmel said.
New Haven Mayor John DeStefano complained during a conference call for analysts Thursday that the
enlarged financial institution would be too big and bureaucratic to effectively serve corporate and
retail customers in the Connecticut city.
Mr. Koelmelnoted that the combined New England headquarters would be in New Haven.
Terms of the deal call for First Niagara to pay $14.09 in cash and stock for each NewAlliance
share, representing a 24% premium to NewAlliances closing stock price Wednesday.
On Thursday, NewAlliance shares jumped $1.42, or 12.5%, to $12.78 in 4 p.m. composite trading on
the New
York Stock Exchange. First Niagara fell 83 cents, or 7%, to $11.95 in Nasdaq composite
trading.
Mr. Zerbe, the Morgan Stanley analyst, pointed to Comerica Inc. of Dallas, Peoples United Financial
Inc. of Bridgeport, Conn., and Prosperity Bancshares Inc. of Houston, as potential buyers of other
financial institutions. Possible sellers include TCF Financial Corp, based in Wayzata, Minn., and
Webster Financial Corp., Waterbury, Conn.
TCF Chief Executive William Cooper has previously said that the company would be for sale at the
right price. Webster didnt comment directly on the report.
As for the potential buyers identified by Mr. Zerbe, executives from Comerica, Peoples and
Prosperity have all recently have expressed interest in making acquisitions.
Return to Top
5. Caisse adds $4.1B in value
National Post
08/20/2010
KAREN MAZURKEWICH
Pg. FP5
Despite turbulent markets overseas, the Caisse de depot et placement du Quebec has avoided the
worst of the fallout. The pension fund said yesterday it has added $4.1-billion in value for the
first half of 2010, a sign that Canadas largest pension fund has weathered the worst of the storm.
While the pension fund appears to have stabilized and outperformed the markets, it has a long way
to go before it makes back the $38.5-billion it lost in 2008. Over the last six months the fund
boosted its net assets to $135.8-billion but that is far below the $196-billion it held before the
economic crisis.
Chief executive Michael Sabia is pleased with the performance of his revamped team: I think how we
navigated some of the near-term issues that we faced in the first half is an indication of the
level of capability that is now sitting around the executive committee at the Caisse.
The Caisses performance stacked up well to the overall returns of Canadas pension fund managers,
whose assets fell by 1.4% in the first six months of 2010 due to faltering global equity markets,
according to RBC Dexia. What weve seen in the last six months is increased volatility in the
markets, and it has to do with the sovereign debt crisis in Europe, and that has [led] to a
dampening in pension fund performance, said Andrew Tan, director of advisory services at RBC Dexia
Investor Services.
The Caisse offset a negative 5.5% return on its equity markets portfolio by pulling in a 14.7%
return in its private-equity portfolio, a 6% return in its fixed-income portfolio and a 10.1%
return in its investments-and-infrastructure portfolio.
The performance in private equity and infrastructure is very important to us and demonstrates a
track record here thats very strong, Mr. Sabia said. The fund wants to do more direct investments
or coinvestments in the future, he said. It will be a pillar in how we invest and what we do.
The one downside to its alternative investments was the continued performance drag of its
real-estate holdings. Mr. Sabia, however, said the real-estate portfolio is seeing meaningful
improvement.
Return to Top
6. Caisse de dépôt Ce nest quun début ! [Caisse de depot This is just the beginning!]
Le Devoir
08/20/2010
JEAN-ROBERT SANSFAÇON
Pg. A8
Pour les six premiers mois de 2010, la Caisse de dépôt et placement du Québec a obtenu un rendement
de 2,3% comparativement zéro pour la même période de lannée dernière, et à -0,7% pour lindice
comparatif du marché. Nous sommes loin de la moyenne de rendement de 7% attendue par les
déposants, mais après lhémorragie de 2008 qui a laissé échapper 40 milliards du bas de laine, il y
a lieu de croire à la capacité de la nouvelle équipe de maintenir léquilibre entre prudence et
rendement.
À la même époque, lan dernier, la Caisse affichait un rendement nul parce quelle navait pas eu
le temps de reconstituer son portefeuille dactions alors que le marché boursier rattrapait une
partie de ses pertes de 2008. Cette année, la Bourse ayant généré des résultats négatifs au cours
des six premiers mois, le même phénomène de sous-pondération en actions du portefeuille de la
Caisse lui a permis de faire «moins pire» que le marché.
Cest donc grâce à de bons résultats dans dautres secteurs, comme les placements privés et les
titres à revenus fixes, que les gestionnaires de la Caisse sont parvenus à sortir la tête de leau
avec un rendement de 2,3% pour le premier semestre de 2010.
Ce quil y a dencourageant dans ces résultats, ce nest pas le pourcentage affiché qui na
vraiment rien de spectaculaire, mais lattitude de la haute direction de la Caisse qui semble avoir
pris un virage plus raisonnable dans sa politique dinvestissements. Finis, les produits dérivés à
la mode du jour qui devaient rapporter gros mais qui ont coulé à la première grosse vague; fini
aussi le recours à outrance à des emprunts pour acheter des actifs quil faudra vendre en panique
pour rembourser les prêteurs si le marché seffondre.
Et comme lobjectif est toujours de faire mieux que lindice de référence du marché pour chacun des
portefeuilles, la Caisse offre désormais à ses déposants dinvestir directement dans des produits
qui copient lindice dans les secteurs spécialisés dont elle na pas lexpertise pour bâtir et
gérer elle-même un portefeuille performant. Cest le cas notamment des obligations à long terme
dont le mouvement est difficile, voire impossible à prévoir, des actions américaines et de marchés
émergents. Il était temps que la Caisse cesse dembaucher des pseudo-experts ou de confier ce
travail à des sous-traitants pas plus en mesure dobtenir des résultats satisfaisants.
Autre changement dimportance, le recours systématique et quotidien à des outils dévaluation du
risque plus performants qui permettent dajuster les portefeuilles selon la conjoncture au lieu de
naviguer de façon intuitive. Largent confié à la Caisse de dépôt nest pas un excédent dépargnes
populaires destiné à la spéculation, mais la base de la pyramide de revenus sur laquelle repose la
sécurité financière des Québécois parvenus à lâge de la retraite. On ne «joue» pas avec ce
capital: on le protège dabord, et on le fait fructifier ensuite.
Il est encore beaucoup trop tôt pour crier victoire. Au cours des dix dernières années, la Régie
des rentes a reçu 2,9% de rendement moyen pour ses placements à la Caisse au lieu des 7% sur
lesquels elle compte à long terme. Ce manque à gagner de plusieurs milliards et le rattrapage quil
impose sont dautant plus importants que léconomie mondiale senlise. À moins dun retournement de
situation, il faudra revoir les cotisations ou les prestations de ce régime public, peut-être même
les deux. Ce que personne ne souhaite.
Return to Top
7. Sticking Banks With the Bill
The New York Times
08/20/2010
FLOYD NORRIS
Pg. B1
If nobody does their job right, and disaster ensues, who should pay for the sins of all?
That is the predicament now confronting the mortgage industry, where it has become clear that many
billions of dollars in home loans were sold, guaranteed and rated as safe without anyone bothering
to examine whether the loans were made with due regard for the rules.
You can make a case call it the caveat emptor case that no one should be able to recover any
losses they suffered from loans that went bad. If they had performed even rudimentary checks before
the loans were made, sold, rated, insured or securitized, its very likely that big problems would
have been visible before disaster hit. There would have been fewer bad loans and many fewer
foreclosures.
That case is not, however, showing any sign of prevailing as legal battles increase in number.
Instead, it appears that big banks will be compelled to pay for their own sins as well as the sins
of others.
Already the four big commercial banks JPMorgan Chase, Bank of America, Wells Fargo and Citigroup
have taken losses of $9.8 billion on loans they have repurchased or expect to be forced to
repurchase. Moshe Orenbuch, an analyst at Credit Suisse, says he thinks that figure will rise to
$20 billion or $30 billion before the wave is over. Other analysts think the number could be
significantly higher.
Even now, long after we learned just how bad the underwriting standards were, it is surprising to
see how bad many of these loans were. In the second quarter, Wells Fargo repurchased $530 million
of mortgage loans. It concluded those loans were worth, on average, a little less than half their
face value.
Wells says it has the right to recover some of that from the companies that sold it the loans.
Unfortunately, ''due primarily to the financial difficulties of some correspondent lenders, we
typically recover on average approximately 50 percent from these lenders, Wells added in a filing
with the Securities and Exchange Commission.
So far, most of the money the banks have paid has gone to Fannie Mae and Freddie Mac, which used to
be government-sponsored enterprises and now, after the bailouts, are government-controlled. But
even though they have collected billions, Fannie and Freddie are getting increasingly frustrated
with the banks for what they see as foot-dragging.
Freddie, in its quarterly report filed this month, said it was now requiring banks ''to commit to
plans for completing repurchases, with financial consequences or with stated remedies for
noncompliance, as part of the annual renewals of our contracts with them.
A spokesman for Freddie would not say just what those remedies or financial consequences might be.
But any bank that wants to keep offering mortgages must have contracts with Fannie and Freddie.
Tying the repurchases to contract renewals could be a strong bargaining chip.
The mortgages sold to Fannie and Freddie were supposed to conform to specified requirements. Those
requirements did get weaker as the credit bubble intensified a fact some bankers privately
mutter the government now wants to forget but they were still of higher quality than many
mortgages sold into private securitizations.
Those securitizations are the subject of demands for mortgage repurchases made by monoline insurers
like MBIA and Ambac, which erred in promising to make the payments if the securitizations did not
have enough money from payments by borrowers.
When MBIA began making such claims last year, it seemed a little presumptuous. In its suits, it
admitted it did virtually no due diligence to assess the quality of the loans it was insuring.
Instead, it said it had relied on the representations and warranties made by banks and brokerage
firms that bought the insurance.
It would be enormously expensive, even if it were logistically feasible, for a credit insurer to
investigate the health of these ground-level loans, MBIA argued in a court filing, adding that if
it had done such research, it would have been forced to charge much higher premiums.
Something similar could be argued by almost everyone involved. To cite one example, Credit Suisse,
which was sued by MBIA after it guaranteed a securitization of second-mortgage loans that may have
been among the worst such loan collections ever, said it had not reviewed the loans either.
Instead, it relied on assurances from the firms that made the loans.
Nor did the bond rating agencies do reviews of individual loans before they assigned AAA ratings to
securities that in no way deserved them. Conveniently, everyone assumed that the others were
telling the truth.
The industry motto could have been, ''Since we trust, why verify?
In decisions that should send alarms through bank boardrooms, MBIA has managed to persuade judges
in three cases that it has a strong enough argument to avoid dismissal at an early stage. In a
decision on Credit Suisse earlier this month, a New York judge rejected the banks claim that MBIA
was a sophisticated party that failed to perform due diligence and thus had only itself to blame.
The prospectus for the deal MBIA insured did have plenty of warnings. There were ''Nina loans (no
income, no assets), for which the borrower did not even have to claim having income or assets to
get the loan. Some of the loans were made by New Century, a subprime lender that had already gone
bankrupt.
Many of the loans left the borrower owing 100 percent of the appraised value of the property,
including the first mortgages sold to others. The prospectus even said that the underwriting
standards varied and that in some cases even those standards had not been met.
But the judge said that all those warnings, and MBIAs failure to do due diligence, were not enough
to let Credit Suisse avoid charges that it made representations and warranties about the loans that
were not accurate.
MBIA has persuaded its auditors to let it book $2.1 billion in receivables from banks, although
only one small bank has reached a settlement with the insurer. Other insurers are making similar
claims. So are some institutions that purchased bad paper, like some Federal Home Loan Banks.
Of course, some banks are now judgment-proof. One of them is IndyMac, which was seized by the
Federal Deposit Insurance Corporation. Unable to get money from the bank, MBIA has now filed suit
against its officers (who may still have some insurance) and the underwriters of the
securitizations that MBIA guaranteed.
Those underwriters, of course, include some of the big banks that did not fail, like Credit Suisse
and JPMorgan Chase. They may have to pay for the sins of their former competitors.
The banks are fighting many repurchase demands, and say they are winning some arguments. The issue
is not whether a given loan went bad, of course, but whether it was properly documented and
underwritten by the standards that were promised.
The result is that Freddie and Fannie and MBIA and Ambac and the banks are all now going over loans
one by one. Had any of them bothered to do that in 2006, 2007 and 2008 when most of the
disastrous loans were made this tragedy could have been avoided.
But they all thought such care would cost too much and take too long. After all, MBIA charged as
little as $77,500 for each $100 million of insurance, and you cant hire many financial analysts
for that kind of money. Fannie and Freddie were competing with each other and with the private
securitization companies for business, and speed mattered.
Banks richly deserve to suffer for their role in creating this mess. But so do a lot of other
players who may well end up being compensated for losses that, to a significant extent, they
brought on themselves by not doing the work they should have done.
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8. BofA and Visa to test cell phone payments
Reuters
08/20/2010
JOE RAUCH and MARIA ASPAN
Bank of America Corp, the largest U.S. consumer bank, and Visa Inc, the worlds largest payment
processor, plan to begin a test program next month that lets customers use smartphones to pay for
purchases in stores.
The program, to run from September through the end of the year in the New York area, is the biggest
step yet by the two companies toward creating a digital wallet with a host of financial
capabilities built into the latest, most sophisticated mobile phones.
Major U.S. banks, technology companies and cellphone providers are jockeying for the lead in the
technology, which some say could become a primary means of everyday purchases.
Visa also plans to conduct a similar test program with US Bancorp this year, a company spokeswoman
said. A US Bancorp spokeswoman confirmed that it would begin its pilot in October.
While mobile payments have been used for years in countries such as Japan, the United States has
been much slower to adopt the technology.
We see this as a critical capability given the increasing acceptance and adoption of bank services
on the phone, Laurie Readhead, Bank of Americas head of electronic commerce, told Reuters.
The program will allow select New York-area employees and customers to install small chips,
supplied by Visa and its technology vendors, in their smartphones that emit radio signals over very
short distances.
Customers would then bump their phones with point-of-sale devices in stores actually they need
only wave the phones near the devices and their bank account data would be collected and their
purchases completed.
Bank of America declined to say how many people would be involved in the pilot, and a company
spokeswoman declined to comment on Visas involvement.
Visa spokeswoman Elvira Swanson said the Bank of America pilot was not larger than the companys
other mobile trials, but she said it could have a more powerful impact on the market than some
previous pilots.
Its a way to accelerate mobile contactless payments in the U.S. market, she said.
Visa said in February that it planned to start testing technology that would allow customers to
make in-store
payments using smartphones. At the time, Visa did not say which banks would conduct
the tests.
Competition is increasing from outside the banking world.
Verizon Wireless, AT&T, T-Mobile USA and Discover Financial Services are working on forming a joint
venture aimed at offering mobile payments services, people familiar with the matter told Reuters.
Bank of America, which introduced mobile banking in 2007, has more than 5 million customers
conducting $15 billion in transactions via their phones primarily bill payments and account
transfers.
The numbers are small compared with the banks 29 million online banking customers, who conduct 1.5
billion transactions electronically, Readhead said.
Those services, bank executives said, will expand as sophisticated mobile phones, like Apple Incs
iPhone and Research In Motion Ltds Blackberry, become increasingly common.
In the second quarter, 42 percent of all consumer handsets sold were smartphones, up from 2 percent
in the second quarter of 2009, according to NPD Group Inc, a market research firm.
Bank of America shares closed down on Thursday 2.25 percent on the New York Stock Exchange at
$13.02. Visa closed down 1.7 percent at $71.63, but their shares rose slightly in aftermarket
trading on Thursday.
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9. Canadas banks offer better prospects than lifecos: UBS
Investment Executive
08/20/2010
JAMES LANGTON
UBS Securities Canada Inc. initiated research coverage of the Canadian life insurance sector with a
cautious stance on Thursday, indicating that, in the current climate, it prefers the banks.
In its report, UBS says that the big three Canadian life insurers appear well positioned operating
in an oligopoly; and, noting that the economic recovery has driven higher revenues, capital, and
asset quality.
However, deflationary risks have continued to increase, resulting in much lower interest rates,
equity returns, and growth. This has hurt investment yields, net income, and returns, it says.
We believe there could be more long-term upside due to higher interest rates, higher equity
returns, improved business mix, higher pricing, and higher normalized [return on equity] and
valuation. However, macro risks and their timing, and related capital implications, remain very
uneven, it says. Furthermore, these risks could increase further, if interest rate and equity
returns remain low.
Additionally, the prospect of increased regulation and the move to new International Financial
Reporting Standards also pose a risk, it says. And, large actuarial changes are expected in the
third quarter, pushing the firm to hold a negative sector outlook on Canadian lifecos.
We prefer Canadian banks over Canadian lifecos due to higher EPS growth, visibility, returns, and
value, and lower macro, regulatory, and accounting risks, it says.
And, within the sector, it favours Sun Life over Manulife, due to lower macro risk and higher
dividend yields, it
concludes.
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10. Fed may need to buy more U.S. treasureies: Bullard
Reuters
08/20/2010
PEDRO NICOLACI da COWSTA
The Federal Reserve may need to ramp up its purchases of U.S. treasury debt if price levels in the
U.S. economy continue to show signs of softening, St. Louis Fed president James Bullard said
yesterday.
Mr. Bullard said such actions were not yet warranted, given expectations for a continued economic
expansion.
But he added that, if further signs of easing price pressures were to emerge, the central bank
should not be shy about using the remaining tools in its policy arsenal.
Should economic developments suggest increased disinflation risk, purchases of treasury securities
in excess of those required to keep the size of the balance sheet constant may be warranted, he
said in prepared remarks.
In a significant policy shift last week, the Fed announced it would begin using the proceeds from
maturing mortgage securities in its portfolio to buy treasury notes, an effort to prevent monetary
conditions from tightening.
The move was aimed at sustaining an economic recovery that looks increasingly troubled, with
persistently high unemployment and a battered housing market denting consumer confidence and
inhibiting business investment.
Mr. Bullard suggested this was enough for now, taking comfort in inflation expectations that he
described as low but manageable. Any additional treasury buying should be undertaken in a measured,
deliberate manner, he said, commensurate with the magnitude of the deflation threat.
Large, sudden purchases rarely are optimal, he said. Shock and awe is almost never a good way
to proceed.
In response to the worst financial crisis since the Great Depression, the Fed not only slashed
interest rates close to zero but also bought more than US$1.5-trillion in mortgage and treasury
securities.
Following a deep recession, the U.S. economy has been growing for four straight quarters. However,
the expansion was already losing steam in the second quarter, and many fear the second half of the
year will be even more lacklustre.
Against that backdrop, core inflation measures, which exclude volatile food and energy prices and
are therefore favoured by Fed officials, remain stuck at their lowest levels in over 40 years.
Return to Top
11. Businesses tap BDC for record loans
The Globe and Mail
08/20/2010
JEREMY TOROBIN
Pg. B5
Canadian entrepreneurs and small businesses took out more loans from Business Development Canada
last year than at any other time in the agencys 65-year history, to cover projects for which even
firms with good credit couldnt get bank financing during the financial crisis.
The Crown corporation, which aims to turn a profit but can take on more risk than traditional
lenders because it isnt trying to maximize revenue, said Thursday that it extended $4.4-billion
worth of loans during the fiscal year that ended on March 31, a 53-per-cent increase over the
previous year.
Tony Perrotta is president and CEO of Greentec International, a Cambridge, Ont.-based company that
disposes of used computer equipment for customers and resells, recycles or donates the components.
A loan from BDC allowed him to add 28,000 square feet to his plant and buy a slew of
state-of-the-art shredders, grinders and other processing equipment, he said.
It was the recession, so a lot of banks were tightening up, they were very cautious with lending,
Mr. Perrotta said in an interview Thursday. So the availability of capital was very difficult, and
they were putting all kinds of restraints and covenants in place.
Demand for financing from sources such as BDC is leveling off as borrowing becomes easier. But the
agencys head worries that the pace of BDC lending for the current year may reflect a holding
pattern in the business community, as some executives ramp up spending in the recovery while many
others hold off until theyre sure it is secure.
Entrepreneurs are not putting forward as many projects opening a new plant, buying new equipment
- as we would like, Jean-René Halde, chief executive officer of BDC, said in an interview from his
office in Montreal. Theyre doing it, but theyre still careful looking at the future in the way
they are investing into larger projects.
Bank of Canada Governor Mark Carney and economists have singled out tepid business investment as a
stubborn soft spot in the rebound. Business spending typically lags in a recovery as companies wait
to see how sustainable it is before increasing spending again.
Companies that are coming to BDC for financing mostly need working capital (short-term cash to beef
up inventories or take care of maintenance upkeep) that got depleted during the downturn, Mr. Halde
said. Thats a good sign, because it shows that businesses are working hard to get rid of their
remaining slack and, in theory, paves the way for bigger investments once things are running at
full tilt.
While there are signs that imports of productivity-enhancing machinery and equipment started to
accelerate between April and June after a virtually flat first quarter, the uncertain climate for
exports to the U.S. and around the world are crimping the plans of many Canadian companies.
Theo Wiering is president of Canadas Log People Inc., a company based in 100 Mile House, B.C.,
that builds and exports custom log homes. While 80 per cent of his sales went to the United States
four years ago, thats down to about 25 per cent now, he said. The housing slump and paralyzed job
market in the U.S. mean Mr. Wiering cant even think about major investments, let alone rehire the
13 workers he had to lay off in the past three years.
Were getting a little bit more from Europe, a little bit from Japan, but were also finding that
those places are quite flat as well, he said. People are generally quite worried about purchasing
big-ticket items. We hear it all the time: Were holding off ... Its been a struggle for us for
two years now, and I think its going to carry on next year too.
Ted Mallett, chief economist at the Canadian Federation of Independent Business, said the
conservative attitude
among small-business owners is likely to persist for now.
Theres more cause to be conservative now, Mr. Mallett said. As a defensive mechanism were
going to be likely to see businesses not likely to be opening their wallets or making bold
investments over the next little while. Theyre still displaying a wait-and-see attitude.
Return to Top
12. Literacy a key to economy
The Lethbridge Herald (AB)
08/20/2010
DAVE SULZ
Pg. A8
Its not surprising that a new poll conducted for ABC Life Literacy Canada indicates most Canadians
- a whopping 95 per cent agree that literacy training is crucial to improving job prospects.
But it goes farther than that. The Ipsos Reid survey found that 90 per cent of respondents agree
(50 per cent strongly, 40 per cent somewhat) that improving the literacy of Canadians is key
to improving the countrys economy.
Along that same vein, 93 per cent agree (60 per cent strongly, 34 per cent somewhat) that
governments need to support Canadians in their efforts to improve their literacy levels.
Theres room for improvement, according to other research. The 2005 adult literacy survey results
from Statistics Canada and the Organization for Economic Co-operation and Development indicated
four in 10 Canadian adults ages 16 to 65 struggle with low literacy, meaning they fall below Level
3 equivalent to high school completion on the literacy measurement scale. That translates to
approximately nine million Canadians who lack the skills deemed necessary to keep up with rapidly
changing skill demands in a knowledge-based society.
The latest poll, the findings of which were released Wednesday, underscores the relationship
between literacy and the economy. Literacy defined as reading, writing and math skills is
increasingly important in an increasingly technology-driven world. Upgrading of skills is an
ongoing process as technology changes quickly, and changes workplaces along with it.
It doesnt only put the onus on workers to update their skills to make themselves more employable
or keep them that way. Employers and governments, too, bear responsibility to make available the
training required to do the job in these ever-changing workplaces.
ABC Life Literacy Canada (www.abclifeliteracy.ca) is doing its part to help. Declaring September as
Life Literacy Month, the non-profit organization has several events planned for next month to
promote literacy, including one that ties in neatly with the findings of the Ipsos Reid poll. Sept.
23 will be Essential Skills Day, designed to trumpet the importance of businesses investing in the
workforce in order to ensure longevity and success in the current economy.
On that day, Craig Alexander, chief economist at TD Bank Financial Group, will be speaking in
Calgary to help raise awareness about workplace literacy and essential skills training.
Literacy Alberta touts the same message to employers on its website (www.literacyalberta.ca), as
does the Alberta Workforce Essential Skills (AWES) Society ( www.nald.ca/AWES), a non-profit
organization which promotes the advantages of a confident, innovative and literate workforce.
Return to Top
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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
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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 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
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Litigation Reform Act of 1995 et des dispositions dexonération comparables des lois canadiennes
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énoncés des sociétés, qui comprennent des termes et expressions comme «
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suivants, entre autres choses, pourraient entraîner de tels écarts importants ou y contribuer : la
capacité dobtenir lapprobation de lopération par les actionnaires de The South Financial Group,
Inc., la capacité de réaliser les synergies prévues découlant de lopération selon les montants ou
léchéancier prévus, la capacité dintégrer les activités de The South Financial Group, Inc. à
celles de La Banque Toronto-Dominion en temps opportun et de manière rentable, et la capacité
dobtenir les approbations gouvernementales de lopération ou de remplir dautres conditions liées
à lopération selon les modalités et léchéancier proposés. Dautres facteurs qui pourraient faire
en sorte que les résultats de La Banque Toronto-Dominion et de The South Financial Group, Inc.
diffèrent considérablement de ceux décrits dans les énoncés prospectifs se trouvent dans le rapport
annuel de 2009 sur formulaire 40-F de La Banque Toronto-Dominion, et dans le rapport annuel de 2009
sur formulaire 10-K de The South Financial Group, Inc. déposés auprès de la Securities and Exchange
Commission (SEC) et disponibles sur le site Internet de la SEC (http://www.sec.gov).
Lopération de fusion envisagée entre La Banque Toronto-Dominion et The South Financial Group, Inc.
sera présentée aux actionnaires de The South Financial Group, Inc. afin quils lapprouvent. La
Banque Toronto-Dominion et The South Financial Group, Inc. ont déposé, auprès de la SEC, une
déclaration denregistrement sur formulaire F-4 qui contient une circulaire de sollicitation de
procurations/un prospectus provisoire, et chacune des sociétés prévoit déposer dautres documents
relatifs à lopération proposée auprès de la SEC. Les actionnaires sont invités à lire la
circulaire de sollicitation de procurations/prospectus provisoire lié à lopération de fusion
proposée, ainsi que la circulaire de sollicitation de procurations/prospectus définitif, lorsque
disponible, ainsi que dautres documents déposés auprès de la SEC, car ils contiendront des
renseignements importants. Les actionnaires peuvent obtenir un exemplaire gratuit de la circulaire
de sollicitation de procurations/prospectus provisoire, et pourront obtenir un exemplaire gratuit
de la circulaire de sollicitation de procurations/prospectus définitif, lorsquil sera disponible,
ainsi que dautres documents ayant fait lobjet dun dépôt qui contiennent de linformation sur La
Banque Toronto-Dominion et The South Financial Group, Inc., sur le site Internet de la SEC
(http://www.sec.gov). Des exemplaires de la circulaire de sollicitation de procurations/prospectus
définitif et des documents déposés auprès de la SEC qui seront intégrés par renvoi dans la
circulaire de sollicitation de procurations/prospectus définitif peuvent aussi être obtenus,
lorsquils seront disponibles, sans frais, en soumettant une demande à The Toronto-Dominion Bank,
15th floor, 66 Wellington Street West, Toronto (Ontario) M5K 1A2, à lattention de : Relations avec
les investisseurs, 1-866-486-4826, ou à The South Financial Group, Inc. Investor Relations, 104
South Main Street, Poinsett Plaza, 6th Floor, Greenville, South Carolina 29601, 1-888-592-3001.
La Banque Toronto-Dominion, The South Financial Group, Inc., leurs administrateurs et dirigeants
respectifs et dautres personnes peuvent être réputés être des participants à la sollicitation de
procurations relativement à lopération de fusion proposée. Linformation concernant les
administrateurs et les dirigeants de La Banque Toronto-Dominion est disponible dans son rapport
annuel sur formulaire 40-F pour lexercice terminé le 31 octobre 2009, qui a été déposé auprès de
la SEC le 3 décembre 2009, et dans son avis de convocation à son assemblée annuelle et circulaire
de procuration de 2010, qui a été déposé auprès de la SEC le 25 février 2010 et dans la déclaration
denregistrement sur formulaire F-4 susmentionnée, qui a été déposée auprès de la SEC le 10 juin
2010. Linformation concernant les administrateurs et les dirigeants de The South Financial Group,
Inc. est disponible dans la circulaire de sollicitation de procurations de The South Financial
Group, Inc. à légard de son assemblée annuelle de 2010, qui a été déposée auprès de la SEC le 7
avril 2010. Dautres renseignements sur les participants à la sollicitation de procurations et une
description de leurs intérêts directs et indirects, par titres détenus ou autres, sont inclus dans
la déclaration denregistrement susmentionnée sur formulaire F-4, qui a été déposée auprès de la
SEC le 10 juin 2010, et dautres documents pertinents qui seront déposés auprès de la SEC
lorsquils seront disponibles.
THE FOLLOWING IS A COMMUNICATION SENT TO EMPLOYEES OF TD BANK, AMERICAS MOST
CONVENIENT BANK AND THE TORONTO-DOMINION BANK ON AUGUST 20, 2010
Daily News Brief
August 20, 2010
Compiled by Brittany Roberge, Corporate and Public Affairs
TD BANK NEWS
1. |
|
Survey: Credit Conditions Continue to Improve
Commercial Record (CT) [Similar articles also ran in Norwich Bulletin (CT), Hartford
Business Journal (CT), and The Day (CT).] |
Connecticut businesses have reported that credit conditions are continuing to slowly improve,
according to the Connecticut Business and Industry Association. This is the third quarter in a row
that Connecticut businesses have reported improvement in their credit conditions. [TD Banks
Michael Hensinger is quoted.]
2. |
|
First Niagara agrees to buy NewAlliance Bancshares Financial Times |
First Niagara, a New York bank, on Thursday agreed to buy another north-east based lender,
NewAlliance Bancshares, in the largest unassisted US bank deal since the financial crisis.
Combining the two lenders will create a bank with more than $29bn in assets and $18bn in deposits.
That would put it among the top 25 US banks, the companies said. [Toronto-Dominion Bank is
mentioned.]
3. |
|
Massachusetts Gov. Deval Patrick praises faith over hate in visit to rebuilding of
Springfield church torched following President Barack Obama election The Republican (MA) |
Prior to visiting Wednesdays 33rd annual Sheriff Michael Ashe clambake, Massachusetts Gov. Deval
Patrick and Springfield Mayor Domenic Sarno visited the construction site of the Macedonia Church
of God in Christ that is being built in the aftermath of an arson fire in 2008 that destroyed a
nearly completed new church on Tinkham Road. [TD Bank is mentioned.]
INDUSTRY NEWS
1. |
|
BigBank Deal Signals More to Come Wall Street Journal |
First Niagara Financial Group Inc. agreed to acquire NewAlliance Bancshares Inc. for $1.5 billion
in the biggest takeover of a U.S. bank since late 2008.
2. |
|
BofA and Visa to test cell phone payments Reuters |
Page 1 of 12
Bank of America Corp, the largest U.S. consumer bank, and Visa Inc, the worlds largest payment
processor, plan to begin a test program next month that lets customers use smartphones to pay for
purchases in stores.
3. |
|
Sticking Banks with the Bill New York Times |
If nobody does their job right, and disaster ensues, who should pay for the sins of all? That is
the predicament now confronting the mortgage industry, where it has become clear that many billions
of dollars in home loans were sold, guaranteed and rated as safe without anyone bothering to
examine whether the loans were made with due regard for the rules.
4. |
|
Fed may need to buy more U.S. treasuries: Bullard Reuters |
The Federal Reserve may need to ramp up its purchases of U.S. treasury debt if price levels in the
U.S. economy continue to show signs of softening, St. Louis Fed president James Bullard said
yesterday.
TD BANK NEWS
1. |
|
Survey: Credit Conditions Continue to Improve
August 19, 2010 Commercial Record (CT) [Similar articles also ran in Norwich Bulletin
(CT), Hartford Business Journal (CT), and The Day (CT).] |
Connecticut businesses have reported that credit conditions are continuing to slowly improve,
according to the Connecticut Business and Industry Association.
This is the third quarter in a row that Connecticut businesses have reported improvement in their
credit conditions. In fact, they are the best they have been in over a year, and businesses expect
continued improvement, according to the second quarter 2010 CBIA/TD Bank Credit Survey.
Weve made some progress, but businesses need a full restoration of available credit in order to
sustain economic growth and expansion, said CBIA Vice President and Economist Peter Gioia.
Continued access to credit allows businesses to make the investments in their plants and
equipment, expand operations, and hire more employees.
Current conditions were rated as good or excellent by 9 percent of respondents, while 50 percent
characterized them as average. Forty-two percent said current conditions are poor or fair, down
from 50 percent in the first quarter of the year. During the next three to six months, 11 percent
expect credit conditions to improve, while 37 percent expect them to worsen, the lowest number in
more than a year.
Other survey findings include 27 percent of respondents saying credit availability is a problem for
their business. The survey also found that 47 percent said that without access to capital they have
been unable to grow or expand their business, 29 percent said they have reduced their workforce and
21 percent said theyve been unable to finance increased sales.
Thirty-one percent of survey respondents used financing within the last three months. Businesses
said they need capital to invest in new plants and equipment (40 percent), expand operations (16
percent), maintain current workforce size (14 percent) and hire new workers (13 percent). More than
three-quarters of businesses who received capital used
Page 2 of 12
traditional bank loans and lines of credit,
29 percent used credit cards and 26 percent used vendor credit.
The lingering effects of the domestic recession continue to make access to capital challenging for
many businesses across Connecticut, said Michael Hensinger, TD Banks
head of middle market banking in Connecticut. Economists believe there is still the risk of a
double-dip recession, and anything we can do to help the small business sector, which generates
much of our new job growth, can help alleviate this concern and keep the economy moving forward.
Top
2. |
|
First Niagara agrees to buy NewAlliance Bancshares
By Helen Thomas
August 20, 2010 Financial Times |
First Niagara, a New York bank, on Thursday agreed to buy another north-east based lender,
NewAlliance Bancshares, in the largest unassisted US bank deal since the financial crisis.
Combining the two lenders will create a bank with more than $29bn in assets and $18bn in deposits.
That would put it among the top 25 US banks, the companies said.
While the Federal Deposit Insurance Corporation regularly sells off distressed banks to their
rivals, by agreeing to share losses on troubled assets, virtually no strategic banks deals have
been struck since late 2008.
This year, Canadas Toronto-Dominion Bank said it would buy South Financial Group, a troubled US
lender, without the assistance of the FDIC.
However, in that deal the US Treasury agreed to take a loss on its investment in the bank through
the Troubled asset relief program, in effect helping the buyer in the transaction.
In contrast, First Niagara and NewAlliance have cleaner balance sheets than some rivals.
What I think is very compelling most compelling about this transaction is that we are putting
two very strong organizations together, said John Koelmel, First Niagara chief executive.
Gerard Cassidy, analyst at RBC Capital Markets, said: this transaction plays into our thesis for
an improved traditional M&A environment as the year progresses, potentially leading to several
high-profile deals in 2011.
Mr. Cassidy added that he expects banks to use acquisitions to supplement earnings growth and
expand their balance sheets in the face of weak loan demand and pressure on pricing.
NewAlliance shareholders can choose to receive cash or stock, or a mixture of the two, worth 1.1
First Niagara shares. The offer was worth about $14.09 per share as of Wednesdays close, a 24 per
cent premium. Based on Wednesdays close, the deal values NewAlliance at about $1.5bn.
Page 3 of 12
On Thursday, shares in Connecticut-based NewAlliance rose 12.5 per cent to $12.78. Shares in First
Niagara, which has a market value of about $2.5bn, fell 6.49 per cent to $11.95.
The combined bank will have 340 branches across Connecticut, Massachussetts, Pennsylvania and
upstate New York.
Top
3. |
|
Massachusetts Gov. Deval Patrick praises faith over hate in visit to rebuilding of
Springfield church torched following President Barack Obama election
By Peter Goonan
August 19, 2010 The Republican (MA) |
SPRINGFIELD Prior to visiting Wednesdays 33rd annual Sheriff Michael Ashe clambake,
Massachusetts Gov. Deval Patrick and Springfield Mayor Domenic Sarno visited the construction site
of the Macedonia Church of God in Christ that is being built in the aftermath of an arson fire in
2008 that destroyed a nearly completed new church on Tinkham Road.
The church, serving a predominantly black congregation, was burned by arsonists just hours after
the election of President Barack Obama in November 2008. Two men have pleaded guilty to arson and a
third is awaiting trial in the fall.
Patrick said he felt pride and joy in seeing construction under way, calling it a victory of
faith over hate.
One message from the project is that the forces of good and reconciliation vastly outnumber the
forces of hate, Patrick said.
Patrick and Sarno were among officials and community members who were credited with assisting the
church in obtaining approval of a $1.8 million loan from TD Bank to move forward with the project.
A group of 33 volunteers from a church and a synagogue in California traveled here last week at
their own expense to help the regular construction crew rebuild the church.
Top
INDUSTRY NEWS
1. |
|
Big Bank Deal Signals More to Come
By Robin Sidel
August 20, 2010 Wall Street Journal |
First Niagara Financial Group Inc. agreed to acquire NewAlliance Bancshares Inc. for $1.5 billion
in the biggest takeover of a U.S. bank since late 2008.
Page 4 of 12
Thursdays deal between the two healthy financial institutions triggered speculation that a
long-awaited wave of consolidation is about to begin among banks still standing after the recession
but grappling with sluggish loan growth and new regulations that will bruise industry profits for
years.
When the industry heals itself a little bit further, we will see a lot of other deals, says John
Duffy, chief executive of investment-banking firm Keefe, Bruyette & Woods Inc., which specializes
in financial institutions.
The 7,932 banks and savings institutions now scattered across the U.S. likely will shrink to about
5,000 within the next decade through mergers and failures, Mr. Duffy predicts.
Dont expect a sudden flood of deals. Bankers and analysts say deal making probably wont
accelerate significantly until next year because many buyers and sellers still are hobbled by bad
loans and economic uncertainty. Some banks are stuck on the sidelines until they repay
taxpayer-funded capital infusions received as part of the U.S. governments Troubled Asset Relief
Program.
Mergers of healthy banks have been rare since the financial crisis erupted. Banks such as J.P.
Morgan Chase & Co. and U.S. Bancorp that sidestepped the worst of the industrys mess generally
have preferred to buy failed institutions on the cheap, instead of paying up for banks still in
business.
A total of 250 banks and savings institutions have failed since the start of 2009, according to the
Federal Deposit Insurance Corp.
We have been hearing from an increasing number of management teams that more banks are willing to
have conversations about potential deals, Ken Zerbe, a banking analyst at Morgan Stanley, wrote in
a report to clients.
First Niagara and NewAlliance arent household names beyond their home turf in the northeastern
U.S., but both companies are considered well-run and comfortable making acquisitions. The two banks
also benefited from the regions economy holding up better than other parts of the U.S.
NewAlliance, based in New Haven, Conn., didnt accept any TARP funds; First Niagara, of Buffalo,
N.Y., repaid last year the $184 million it received from the government.
We have a distracted, diverted competitive landscape, and we want to seize the opportunity rather
than let things settle down and sort themselves out, John Koelmel, First Niagaras president and
chief executive, said Thursday.
Among other potential deals, Spains Banco Santander SA, which bought Sovereign Bancorp in January
2009, is in discussions to buy M&T Bank Corp., also based in Buffalo, according to people familiar
with the matter.
A spokeswoman for Sovereign and spokesman for M&T declined to comment.
First Niagara and NewAlliances cash-and-stock deal would catapult the combined company into the
top 25 U.S. banks by assets. After the takeover is completed, First Niagara will have $29 billion
in assets and more than 340 branches in New York, Pennsylvania, Connecticut and Massachusetts. Its
biggest rivals will include J.P. Morgan, Bank of America Corp. and PNC Financial Services Group.
Page 5 of 12
Size does matter to the extent it better positions us, and to better enable us to win in more
situations, and ultimately thats what were trying to do, Mr. Koelmel said.
New Haven Mayor John DeStefano complained during a conference call for analysts Thursday that the
enlarged financial institution would be too big and bureaucratic to effectively serve corporate and
retail customers in the Connecticut city.
Mr. Koelmelnoted that the combined New England headquarters would be in New Haven.
Terms of the deal call for First Niagara to pay $14.09 in cash and stock for each NewAlliance
share, representing a 24% premium to NewAlliances closing stock price Wednesday.
On Thursday, NewAlliance shares jumped $1.42, or 12.5%, to $12.78 in 4 p.m. composite trading on
the New York Stock Exchange. First Niagara fell 83 cents, or 7%, to $11.95 in Nasdaq composite
trading.
Mr. Zerbe, the Morgan Stanley analyst, pointed to Comerica Inc. of Dallas, Peoples United Financial
Inc. of Bridgeport, Conn., and Prosperity Bancshares Inc. of Houston, as potential buyers of other
financial institutions. Possible sellers include TCF Financial Corp, based in Wayzata, Minn., and
Webster Financial Corp., Waterbury, Conn.
TCF Chief Executive William Cooper has previously said that the company would be for sale at the
right price. Webster didnt comment directly on the report.
As for the potential buyers identified by Mr. Zerbe, executives from Comerica, Peoples and
Prosperity have all recently have expressed interest in making acquisitions.
Top
2. |
|
BofA and Visa to test cell phone payments
By Joe Rauch and Maria Aspan
August 20, 2010 Reuters |
Bank of America Corp, the largest U.S. consumer bank, and Visa Inc, the worlds largest payment
processor, plan to begin a test program next month that lets customers use smartphones to pay for
purchases in stores.
The program, to run from September through the end of the year in the New York area, is the biggest
step yet by the two companies toward creating a digital wallet with a host of financial
capabilities built into the latest, most sophisticated mobile phones.
Major U.S. banks, technology companies and cell phone providers are jockeying for the lead in the
technology, which some say could become a primary means of everyday purchases.
Visa also plans to conduct a similar test program with US Bancorp this year, a company spokeswoman
said. A US Bancorp spokeswoman confirmed that it would begin its pilot in October.
While mobile payments have been used for years in countries such as Japan, the United States has
been much slower to adopt the technology.
Page 6 of 12
We see this as a critical capability given the increasing acceptance and adoption of bank services
on the phone, Laurie Readhead, Bank of Americas head of electronic commerce, told Reuters.
The program will allow select New York-area employees and customers to install small chips,
supplied by Visa and its technology vendors, in their smartphones that emit radio signals over very
short distances.
Customers would then bump their phones with point-of-sale devices in stores actually they need
only wave the phones near the devices and their bank account data would be collected and their
purchases completed.
Bank of America declined to say how many people would be involved in the pilot, and a company
spokeswoman declined to comment on Visas involvement.
Visa spokeswoman Elvira Swanson said the Bank of America pilot was not larger than the companys
other mobile trials, but she said it could have a more powerful impact on the market than some
previous pilots.
Its a way to accelerate mobile contactless payments in the U.S. market, she said.
Visa said in February that it planned to start testing technology that would allow customers to
make in-store payments using smartphones. At the time, Visa did not say which banks would conduct
the tests.
Competition is increasing from outside the banking world.
Verizon Wireless, AT&T, T-Mobile USA and Discover Financial Services are working on forming a joint
venture aimed at offering mobile payments services, people familiar with the matter told Reuters.
Bank of America, which introduced mobile banking in 2007, has more than 5 million customers
conducting $15 billion in transactions via their phones primarily bill payments and account
transfers.
The numbers are small compared with the banks 29 million online banking customers, who conduct 1.5
billion transactions electronically, Readhead said.
Those services, bank executives said, will expand as sophisticated mobile phones, like Apple Incs
iPhone and Research In Motion Ltds Blackberry, become increasingly common.
In the second quarter, 42 percent of all consumer handsets sold were smartphones, up from 2 percent
in the second quarter of 2009, according to NPD Group Inc, a market research firm.
Bank of America shares closed down on Thursday 2.25 percent on the New York Stock Exchange at
$13.02. Visa closed down 1.7 percent at $71.63, but their shares rose slightly in aftermarket
trading on Thursday.
Top
Page 7 of 12
3. |
|
Sticking Banks with the Bill
By Floyd Norris
August 20, 2010 New York Times |
If nobody does their job right, and disaster ensues, who should pay for the sins of all?
That is the predicament now confronting the mortgage industry, where it has become clear that many
billions of dollars in home loans were sold, guaranteed and rated as safe without anyone bothering
to examine whether the loans were made with due regard for the rules.
You can make a case call it the caveat emptor case that no one should be able to recover any
losses they suffered from loans that went bad. If they had performed even rudimentary checks before
the loans were made, sold, rated, insured or securitized, its very likely that big problems would
have been visible before disaster hit. There would have been fewer bad loans and many fewer
foreclosures.
That case is not, however, showing any sign of prevailing as legal battles increase in number.
Instead, it appears that big banks will be compelled to pay for their own sins as well as the sins
of others.
Already the four big commercial banks JPMorgan Chase, Bank of America, Wells Fargo and Citigroup
have taken losses of $9.8 billion on loans they have repurchased or expect to be forced to
repurchase. Moshe Orenbuch, an analyst at Credit Suisse, says he thinks that figure will rise to
$20 billion or $30 billion before the wave is over. Other analysts think the number could be
significantly higher.
Even now, long after we learned just how bad the underwriting standards were, it is surprising to
see how bad many of these loans were. In the second quarter, Wells Fargo repurchased $530 million
of mortgage loans. It concluded those loans were worth, on average, a little less than half their
face value.
Wells says it has the right to recover some of that from the companies that sold it the loans.
Unfortunately, ''due primarily to the financial difficulties of some correspondent lenders, we
typically recover on average approximately 50 percent from these lenders, Wells added in a filing
with the Securities and Exchange Commission.
So far, most of the money the banks have paid has gone to Fannie Mae and Freddie Mac, which used to
be government-sponsored enterprises and now, after the bailouts, are government-controlled. But
even though they have collected billions, Fannie and Freddie are getting increasingly frustrated
with the banks for what they see as foot-dragging.
Freddie, in its quarterly report filed this month, said it was now requiring banks ''to commit to
plans for completing repurchases, with financial consequences or with stated remedies for
noncompliance, as part of the annual renewals of our contracts with them.
A spokesman for Freddie would not say just what those remedies or financial consequences might be.
But any bank that wants to keep offering mortgages must have contracts with Fannie and Freddie.
Tying the repurchases to contract renewals could be a strong bargaining chip.
The mortgages sold to Fannie and Freddie were supposed to conform to specified requirements. Those
requirements did get weaker as the credit bubble intensified a fact
Page 8 of 12
some bankers privately
mutter the government now wants to forget but they were still of higher quality than many
mortgages sold into private securitizations.
Those securitizations are the subject of demands for mortgage repurchases made by monoline insurers
like MBIA and Ambac, which erred in promising to make the payments if the securitizations did not
have enough money from payments by borrowers.
When MBIA began making such claims last year, it seemed a little presumptuous. In its suits, it
admitted it did virtually no due diligence to assess the quality of the loans it was insuring.
Instead, it said it had relied on the representations and warranties made by banks and brokerage
firms that bought the insurance.
It would be enormously expensive, even if it were logistically feasible, for a credit insurer to
investigate the health of these ground-level loans, MBIA argued in a court filing, adding that if
it had done such research, it would have been forced to charge much higher premiums.
Something similar could be argued by almost everyone involved. To cite one example, Credit Suisse,
which was sued by MBIA after it guaranteed a securitization of second-mortgage loans that may have
been among the worst such loan collections ever, said it had not reviewed the loans either.
Instead, it relied on assurances from the firms that made the loans.
Nor did the bond rating agencies do reviews of individual loans before they assigned AAA ratings to
securities that in no way deserved them. Conveniently, everyone assumed that the others were
telling the truth.
The industry motto could have been, Since we trust, why verify?
In decisions that should send alarms through bank boardrooms, MBIA has managed to persuade judges
in three cases that it has a strong enough argument to avoid dismissal at an early stage. In a
decision on Credit Suisse earlier this month, a New York judge rejected the banks claim that MBIA
was a sophisticated party that failed to perform due diligence and thus had only itself to blame.
The prospectus for the deal MBIA insured did have plenty of warnings. There were Nina loans (no
income, no assets), for which the borrower did not even have to claim having income or assets to
get the loan. Some of the loans were made by New Century, a subprime lender that had already gone
bankrupt.
Many of the loans left the borrower owing 100 percent of the appraised value of the property,
including the first mortgages sold to others. The prospectus even said that the underwriting
standards varied and that in some cases even those standards had not been met.
But the judge said that all those warnings, and MBIAs failure to do due diligence, were not enough
to let Credit Suisse avoid charges that it made representations and warranties about the loans that
were not accurate.
MBIA has persuaded its auditors to let it book $2.1 billion in receivables from banks, although
only one small bank has reached a settlement with the insurer. Other insurers are making similar
claims. So are some institutions that purchased bad paper, like some Federal Home Loan Banks.
Page 9 of 12
Of course, some banks are now judgment-proof. One of them is IndyMac, which was seized by the
Federal Deposit Insurance Corporation. Unable to get money from the bank, MBIA
has now filed suit against its officers (who may still have some insurance) and the underwriters of
the securitizations that MBIA guaranteed.
Those underwriters, of course, include some of the big banks that did not fail, like Credit Suisse
and JPMorgan Chase. They may have to pay for the sins of their former competitors.
The banks are fighting many repurchase demands, and say they are winning some arguments. The issue
is not whether a given loan went bad, of course, but whether it was properly documented and
underwritten by the standards that were promised.
The result is that Freddie and Fannie and MBIA and Ambac and the banks are all now going over loans
one by one. Had any of them bothered to do that in 2006, 2007 and 2008 when most of the
disastrous loans were made this tragedy could have been avoided.
But they all thought such care would cost too much and take too long. After all, MBIA charged as
little as $77,500 for each $100 million of insurance, and you cant hire many financial analysts
for that kind of money. Fannie and Freddie were competing with each other and with the private
securitization companies for business, and speed mattered.
Banks richly deserve to suffer for their role in creating this mess. But so do a lot of other
players who may well end up being compensated for losses that, to a significant extent, they
brought on themselves by not doing the work they should have done.
Top
4. |
|
Fed may need to buy more U.S. treasuries: Bullard
By Pedro Nicolaci da Cowsta
August 20, 2010 Reuters |
The Federal Reserve may need to ramp up its purchases of U.S. treasury debt if price levels in the
U.S. economy continue to show signs of softening, St. Louis Fed president James Bullard said
yesterday.
Mr. Bullard said such actions were not yet warranted, given expectations for a continued economic
expansion.
But he added that, if further signs of easing price pressures were to emerge, the central bank
should not be shy about using the remaining tools in its policy arsenal.
Should economic developments suggest increased disinflation risk, purchases of treasury securities
in excess of those required to keep the size of the balance sheet constant may be warranted, he
said in prepared remarks.
In a significant policy shift last week, the Fed announced it would begin using the proceeds from
maturing mortgage securities in its portfolio to buy treasury notes, an effort to prevent monetary
conditions from tightening.
Page 10 of 12
The move was aimed at sustaining an economic recovery that looks increasingly troubled, with
persistently high unemployment and a battered housing market denting consumer confidence and
inhibiting business investment.
Mr. Bullard suggested this was enough for now, taking comfort in inflation expectations that he
described as low but manageable. Any additional treasury buying should be undertaken in a measured,
deliberate manner, he said, commensurate with the magnitude of the deflation threat.
Large, sudden purchases rarely are optimal, he said. Shock and awe is almost never a good way
to proceed.
In response to the worst financial crisis since the Great Depression, the Fed not only slashed
interest rates close to zero but also bought more than US$1.5-trillion in mortgage and treasury
securities.
Following a deep recession, the U.S. economy has been growing for four straight quarters. However,
the expansion was already losing steam in the second quarter, and many fear the second half of the
year will be even more lackluster.
Against that backdrop, core inflation measures, which exclude volatile food and energy prices and
are therefore favored by Fed officials, remain stuck at their lowest levels in over 40 years.
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
Page 11 of 12
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 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 12 of 12