Briefly:

(April 30, 2004) Today is the deadline for filing taxes and while your clients no doubt had them in weeks ago, there are bound to be some Canadians left scrambling to meet the midnight cut-off.

Those owing money to the government will face an instant penalty of 5%, plus another 1% for each month until the return is filed. On top of that, the feds charge 7% interest on the amount, compounded quarterly.

Some tax experts suggest that anyone who thinks they owe money on their taxes but cannot complete the paperwork on time, might consider estimating the amount an file accordingly. They will avoid the late filing penalty and can always file an adjustment once they complete their calculations. It might even be best to overestimate, since anyone who overpays their taxes will earn 5% interest.

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Mortgage group hails designation push

(April 30, 2004) The Canadian Institute of Mortgage Brokers and Lenders (CIMBL) says they have received a rush of applications for training toward the recently launched Accredited Mortgage Professional (AMP) designation.

“Canada’s $600 billion residential mortgage industry is moving toward the establishment of national standards,” said Mark Webb, senior director of professional affairs for CIMBL. “By taking this initiative the mortgage industry is taking its rightful place alongside other financial sectors such as insurance, financial planning and securities.”

The program includes a mandatory ethics course, as well as proficiency courses offered across the country. Members receiving the designation must complete 10 hours of continuing education per year to maintain their standing.

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Investors Group posts strong quarter

(April 30, 2004) Investors Group has reported strong first-quarter earnings, posting a profit of $147.9 million. Gross revenues for the first three months of 2004 were $520.4 million. The company earned $119.7 million for the same period in 2003.

“Higher mutual fund assets contributed to strong earnings growth, while improving investor confidence resulted in much stronger mutual fund sales,” said Jeffrey Orr, Investors Group president and CEO.

Mutual fund assets under management and administration totalled $78.1 billion at the end of the quarter, compared to $64.4 billion at March 31, 2003.

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CWB closes HSBC insurance deal

(April 30, 2004) Canadian Western Bank (CWB) has completed its acquisition of HSBC Canadian Direct Insurance Incorporated, which is now renamed Canadian Direct Insurance Incorporated.

The deal will add 125,000 clients to the bank’s customer base and about 200 employees.

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BMO boosts fund presence in China

(April 29, 2004) BMO Financial Group has boosted its stake in Fullgoal Fund Management Company Ltd. of China to 28% from 17%. The deal is still subject to approval by Chinese regulators.

“The potential growth in China’s asset-management marketplace is occurring as expected and we are now better positioned to take advantage of the significant opportunities this presents,” said Gilles Ouellette, president and CEO of the private client group with BMO Financial Group. “We have also strengthened our relationships with our equal shareholders, the two largest securities firms in China. This means we will be exploring other opportunities, outside of Fullgoal, to expand our wealth management and investment banking services in Asia.”

BMO is partnered with Haitong Securities Company Limited and Shenyin & Wanguo Securities Company Limited, which boosted their stakes by the same amount.

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Great-West Life earnings soar

(April 29, 2004) Great-West Lifeco (Lifeco) has issued its latest quarterly earnings report, posting a profit of $383 million, compared to $253 million in the first quarter a year ago, an increase of 51%.

This figure excludes one-time charges associated with the acquisition of Canada Life Financial Corporation. Including restructuring costs, earnings were still $376 million.

The company declared a 32.25 cent dividend, payable June 30 and dividends paid in the first quarter are 19% higher than for the same period last year.

Consolidated net earnings for Great-West Lifeco include the net operating earnings of the Great-West Life Assurance Company, Canada Life Financial Corporation, London Life Insurance and Great-West Life and Annuity Insurance, together with Lifeco’s corporate results.

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Sun Life posts higher profits

(April 29, 2004) Sun Life Financial is reporting first-quarter operating earnings of $425 million, up 27% from Q1 of 2003. The results exclude a $59 million charge related to the firm’s settlement with the SEC. Including the charge, net earnings were $366 million.

“Overall, we continue to make good progress toward success on the international financial services stage as we focus on growth and leveraging best practices throughout the organization,” said Donald A. Stewart, CEO of Sun Life.

The firm announced a 21 cent dividend for its common shares.

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RBC releases homeowner survey

(April 29, 2004) Canadian homeowners appear somewhat reluctant to tap their home equity, but could be using the cash to get further ahead, according to RBC Royal Bank’s 11th Annual Homeowners Survey.

The survey found 90% were aware they could borrow against their home equity, with about 23% saying they have already done so. Of those who have not, 33% (about 23% of the total survey) say they would be comfortable taking out a home equity loan.

“As your home continues to increase in value it often makes sense to tap into that equity for things like maxing RRSP contributions, investments or even funding a child’s education through RESPs, especially when rates are as low as they are now,” says Nancy Mitchell, national manager, mortgages, RBC Royal Bank. “Think of it as putting your house to work for you.”

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IPC shareholders approve IG deal

(April 29, 2004) IPC Financial Network shareholders have voted in favour of the sale to Investors Group of its wholly owned subsidiary, 4221079 Canada Inc. — a firm set up specifically to facilitate the purchase of IPC Financial. A special meeting was held yesterday in Toronto.

“The outcome of the shareholder vote speaks volumes for not only the financial merit, but also our management’s and advisors’ enthusiasm toward this transaction,” says Steve Meehan, CEO of IPC. “We look forward to closing this transaction and are extremely excited about continuing our growth with our new partners”.

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CWB completes Valiant Trust buyout

(April 29, 2004) Canadian Western Bank (CWB) has completed its acquisition of Calgary-based Valiant Trust Company.

Valiant is a non-deposit-taking specialty trust company providing stock transfer and corporate trustee services to public companies and income trusts.

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Nortel fires top executives

(April 28, 2004) Nortel Networks announced this morning it had fired CEO Frank Dunn “for cause,” replacing him with director William Owens.

The network giant also announced the firing of former CFO Douglas Beatty and controller Michael Gollogly, also for cause. The firm said it would be restating its 2001, 2002 and 2003 earnings and delayed the release of its most recent quarterly report.

One of the most widely held stocks on the TSX, Nortel dropped more than 25% on the day and contributed to a 200-point index decline by midday.

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Manulife closes Hancock deal

(April 28, 2004) Manulife Financial has completed its acquisition of John Hancock Financial, making it the second largest life insurer in North America and the largest public company in Canada.

“We are pleased to welcome John Hancock and Maritime Life customers, distribution partners and employees, as well as former John Hancock shareholders, to the Manulife family,” said Dominic D’Alessandro, Manulife president and CEO. “The addition of these businesses and the resources they bring will help us realize our vision to be the most professional life insurance company in the world.”

John Hancock shares will cease trading on the New York Stock Exchange at the close of the day. The deal gives its 675,000 shareholders 1.1853 Manulife common shares per Hancock share.

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Pension returns hit 18-year high

(April 27, 2004) Canadian pension plan returns have hit an 18-year high, thanks to four consecutive quarters of healthy gains in the equity market, according to a report released by Benchmark, the investment analytics wing of RBC Global Services.

Balanced funds posted a one-year gain of 23.9%, with a 3.9% gain being posted in the first quarter of 2004. In comparison, the TSX made a gain of 37.7% and 4.9% respectively for the same periods.

“Bonds have kept pace, too. Canadian fixed income managers averaged 3.2% over the quarter and 11% in the year, slightly ahead of the Scotia Capital Universe Bond Index,” says Don McDougall, director of Benchmark. “With all major asset classes yielding similar returns for the quarter, asset allocation mattered less than in 2003.”

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Meritas calls on Pepsi to address AIDS crisis

(April 27, 2004) An Ontario mutual fund company is calling on Pepsi to address the business impact of the AIDS crisis. Meritas Mutual Funds has co-sponsored a shareholder resolution asking the soft-drink giant to review the economic effect of the AIDS pandemic on its operations.

The disease has hit Africa hard, and is now spreading into Russia and Asia, areas where Pepsi has significant business interests, Meritas said in a release.

“When company workers, customers and market stability is at risk, so is shareholder value,” says Meritas president Gary Hawton. “We believe it’s in both the company and shareholders’ best interest to implement a proactive approach.”

“It’s no longer just an issue of increasing charitable response to a great human tragedy,” Hawton added. “It’s about making a strategic plan to address the pandemic and preserve stability in the decade ahead.”

Hawton says Meritas and the other co-sponsors of the resolution — including lead filer Mennonite Mutual Aid — have been in discussions with Pepsi on the subject for two years. “But we still need firm evidence that the company is planning to address this threat.”

The resolution will be voted on at Pepsi’s annual meeting in Texas on May 5. A similar resolution last year received 7.5% shareholder support.

In an unusual move, Pepsi rival Coca-Cola recently accepted a similar resolution and has encouraged shareholders to support it at the firm’s annual general meeting later this month. Company boards rarely endorse social or environmental shareholder resolutions.

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OmbudsNetwork offers online complaint tool

(April 27, 2004) Financial Services OmbudsNetwork has added an online complaint tool, called the Complaint Courier, aimed at resolving issues more quickly.

“Our Web site, www.cfson.ca, was originally designed to complement the services offered by our consumer assistance specialists,” says Pierre Gravelle, OmbudsNetwork’s CEO. “By working together with the consumer gateway, we are now able to cost-effectively add a level of interactivity, resulting in an additional channel for consumers. We look forward to continuing our joint effort to further refine the module, based on feedback we receive from consumers on this initial offering.”

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Manulife profits soar

(April 26, 2004) Manulife Financial has reported a big boost in profits for the latest quarter, with earnings rising 28% to $428 million. This increase comes despite the damage done by the soaring dollar, which shaved $31 million from the bottom line.

“Our first-quarter results built on the strong momentum of 2003, with Manulife Financial continuing to gain market share in many of its businesses,” said Dominic D’Alessandro, president and chief executive officer of Manulife Financial. “Our merger with John Hancock, which we expect to close in just a few days, positions Manulife Financial well for continued strong growth in the future.”

Earnings per share climbed 26% to 92 cents, up from 73 cents in 2003. Assets under management hit $165.1 billion as of March 31, 2004, an increase of 5% from the beginning of the year and 17% compared to 2003.

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Ontario regulator improving on enforcement, says Brown

(April 26, 2004) The Ontario Securities Commission (OSC) has made significant strides in improving its enforcement efforts, but more needs to be done, says chair David Brown.

In a speech last Friday at York University in Toronto, Brown noted that the commission has obtained jail sentences in four out of its last five cases in which it has sought a jail term, has successfully initiated more than 100 actions in the past four years and has reduced the average time to complete an investigation to 13 months from 21 months.

Despite the progress, Brown noted that the OSC’s powers are limited to breaches of securities laws, not fraud, market manipulation or theft. “If the police don’t prosecute, we can only prosecute for a breach of the broker’s duty to treat the client fairly.”

He says there are larger enforcement challenges, such as the lack of integration among the RCMP, provincial police, provincial attorneys general and securities regulators.

“If all of these agencies pulled together, it would be a phenomenal force,” he said. “We need to figure out a way to bring the groups together and to establish a clearer responsibility and a clearer authority for all concerned.”

One way to accomplish that would be through a single national securities regulator, Brown added.

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Ethical quietly closes three funds

(April 26, 2004) Vancouver-based Ethical Funds is closing three mutual funds, effective June 28, 2004.

The socially responsible investing (SRI) specialist posted a note on its Web site last week, announcing the termination of the Ethical Global Growth Fund, Ethical U.S. Special Equity Fund, and Ethical European Equity Fund.

No reasons were cited for the closures, which leave Ethical with 11 funds in its SRI fund family.

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(04/26/04)