It appears as though BMO has avoided a bullet this time.
BMO announced late yesterday that it has reached a deal that will transform the ABCP trusts in a similar fashion to the restructuring that's being attempted in the rest of the $32-billion third-party ABCP sector.
DBRS structured finance analyst James Feehely said this is "another positive step in the restructuring of the third-party ABCP market."
Subby wrote:It appears as though BMO has avoided a bullet this time.
BMO announced late yesterday that it has reached a deal that will transform the ABCP trusts in a similar fashion to the restructuring that's being attempted in the rest of the $32-billion third-party ABCP sector.
DBRS structured finance analyst James Feehely said this is "another positive step in the restructuring of the third-party ABCP market."
Risk manager joins BMO board
TARA PERKINS
Globe and Mail Update
March 28, 2008 at 8:42 AM EDT
Bank of Montreal said Friday that it has appointed Don Wilson III, a former JP Morgan Chase & Co. chief risk officer, to its board.
The bank's chairman, David Galloway, told investors at the bank's annual meeting earlier this month that BMO would look to strengthen its board with people who had a strong expertise in risk management.
Mr. Wilson retired from JP Morgan Chase & Co. in 2006, having been responsible for credit, equity, market and operational risk globally, BMO said Friday.
“We are pleased to welcome Don to the board of directors,” Mr. Galloway stated. “He is a superbly qualified individual, who brings a broad competence in financial markets and all aspects of risk management.
“I am confident that Don's wealth of experience in financial institutions globally will serve the bank well.”
Bank of Montreal's recent first quarter earnings were hurt by nearly half a billion dollars in writedowns relating to the liquidity crunch. Last year, natural gas trading problems cost the bank more than $800-million.
Mr. Galloway told investors at the bank's annual meeting that the board had overseen a complete review of risk management systems and procedures at the bank.
Dumb question, but why would anyone buy the preferreds, unless they have a very bearish view of BMO going forwards over the next 5 years or so, or they believe the current common dividend may be at risk.
morleymarkle wrote:Dumb question, but why would anyone buy the preferreds, unless they have a very bearish view of BMO going forwards over the next 5 years or so, or they believe the current common dividend may be at risk.
Dumb question, but why would anyone buy the preferreds, unless they have a very bearish view of BMO going forwards over the next 5 years or so, or they believe the current common dividend may be at risk.
Another question. Why would anybody purchase the IPO when the can wait and get them on sale?
Not only that, but a very solid quarter. What seems most impressive at first blush is the strength of regulatory capital measures and the progress the bank has made in delevering. It just goes to show you that a solid DRiP benefits more than just the shareholders. It's also a very effective method to build a balance sheet.
"On what principle is it, that when we see nothing but improvement behind us, we are to expect nothing but deterioration before us?"
Thomas Babington Macaulay in 1830
And the dividend is safe. This is one of my biggest holdings - I'm relieved (and kinda impressed) that BMO could post decent numbers in such a chaotic market.
Am I just being naive ?
Could there be more to it
Well positioned, and consistent....two weeks ago I was thinking this and possibly CM would be the ugly ones that would through a surprize in the mix (equity issue etc.).
The market response at this point is a bit muted....as there is good news in a few spots (retail sales numbers, new fed program etc.), it is nice to see the market actually relax and take things in stride.
Blonde Bond wrote:
Am I just being naive ?
Could there be more to it
BMO credited the change of accounting rules allowing them to decide how much loss they wanted us to believe they had to not value their commercial paper at mark-to-market. I'm still surprised at how much better their results look, despite the acknowledged $183 million loss they avoided. It's not a "technical" loss
On a more personal note, I decided to review my investment portfolio, and if I value all my securities at book value, I'm flush YTD
I think the rule that the banks use (and I am not an accountant so bow to their expertise), but banks can transfer securities from the accounting classifcation 'held for trading' which they mark, and those 'held for sale' which they don't have to mark.
As said, that's my understanding and it is a newer rule so not sure if I understood correctly.
If it is true, and it would obviously have less mark to market type of loss, but I assume if it is the asset marked for sale category you have to sell anyway and book the loss.
mpav wrote:I think the rule that the banks use (and I am not an accountant so bow to their expertise), but banks can transfer securities from the accounting classifcation 'held for trading' which they mark, and those 'held for sale' which they don't have to mark.
As said, that's my understanding and it is a newer rule so not sure if I understood correctly.
If it is true, and it would obviously have less mark to market type of loss, but I assume if it is the asset marked for sale category you have to sell anyway and book the loss.
According to this Reuters article, the only big Canadian bank NOT using this accounting 'flexibility' is BNS. I guess that means BNS earnings will be the most accurate this quarter.
Bank of Montreal [BMO-T]is issuing $1-billion in common shares, making it the third big bank to issue equity recently as financial institutions seek to strengthen their capital levels.
BMO said Monday it will issue 33,340,000 shares at $30 apiece in an offering that's expected to close Dec. 24.
Sedulously eschew obfuscatory hyperverbosity and prolixity.
Seems everyone is tapping the market....what happens when the last one comes to party and has found there is no more food (or alcohol)?
All the bank issues are getting fully placed, but if we keep going like this, eventually they will either run out of investors, or have to be more international.
mpav wrote:All the bank issues are getting fully placed, but if we keep going like this, eventually they will either run out of investors, or have to be more international.
When they keep giving them away at a discount to the market, I guess there will always be takers.
at that offering implies a yield of 9.33%. As juicy as that sounds, it's scary to me.
Though their dividend history is impressive, there's always a first for everything especially in this unprecendented market.
Mr. Market knows something and I'm not sure what. The other thing I noticed that is aside from TD most other issuers have fallen below the issue price after time.
Locke wrote:at that offering implies a yield of 9.33%. As juicy as that sounds, it's scary to me.
Though their dividend history is impressive, there's always a first for everything especially in this unprecendented market.
Mr. Market knows something and I'm not sure what.
"The stock market is all about Insiders taking advantage of Outsiders". I wish I could remember where I read that. But there's a lot of truth to it--and I wonder if that's what is happening here. The Insiders being BMO, in this case.
Locke wrote:at that offering implies a yield of 9.33%. As juicy as that sounds, it's scary to me.
Though their dividend history is impressive, there's always a first for everything especially in this unprecendented market.
Something is up here. The cost of capital on this equity issue is way higher than the competition and based on their recently released numbers, not even really necessary...supposedly. I know that if I still owned it, I would be concerned. This seems desperate to me. Why would you raise equity at book value when you have very little in the way of goodwill and intangibles on the balance sheet?
"On what principle is it, that when we see nothing but improvement behind us, we are to expect nothing but deterioration before us?"
Thomas Babington Macaulay in 1830