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(March 20, 2008) BMO Financial Group has reached agreements with the counterparties to its Apex and Sitka trusts, allowing the bank breathing space to restructure the trusts.

“This was a complex deal that was achieved through the efforts of both the investors and the swap counterparties,” said Tom Milroy, CEO of BMO Capital Markets. “The restructuring will avoid unnecessary losses and will preserve the trusts’ underlying positions, the quality of which are AAA.”

The trusts contain about 450 debt obligations. Milroy says these pose little threat to the bank at this time, and the bank says it does not expect any further write-downs associated with these trusts. BMO will not be providing any protection from the risk of actual realized credit losses to subordinated note holders.

Under the agreement, the maturity of the trusts will be extended from their current five years to eight. BMO will provide $850 million in additional funding, with another $300 million coming from other sources, to satisfy collateral calls.

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Scotia snaps up Holt

(March 20, 2008) Scotiabank has named Derek Holt to the position of vice-president, economics, for Scotia Capital. Holt is the former assistant chief economist with RBC Financial Group.

“Derek Holt is a highly respected analyst and advisor with extensive background and expertise in the financial services industry,” said Warren Jestin, senior vice-president and chief economist, Scotiabank. “He is an exceptional addition to our Scotia Capital economics team.”

Holt will focus on fixed income and equity markets at Scotia Capital, and provide financial markets forecasting and institutional-side analysis.

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Slowdown should be brief: Barclays

(March 20, 2008) The U.S. economy should rebound in the second half of 2008, as the government’s economic stimulus package and Federal Reserve interest rate cuts work their way through the system, according to a report by Barclays Capital.

“Throughout the credit turmoil, the global economic expansion has remained largely on track,” the report says. “Growth in the U.S. has ground to a halt in the face of a continuing sharp drop in residential construction and considerable weakness in consumer spending. Support from exports and well-maintained capital spending has prevented a collapse, however.”

The report goes on to point out that growth outside of the U.S. has held up well, with industrial output slowing, but still growing by more than 3%.

Barclays even suggests it might be a good time to start rebuilding portfolio exposure to risk. “U.S. and European equities are inexpensively valued. Trailing PE ratios are at 15 year — and in the case of the Eurozone 20 year — lows. Both dividend and earnings yields are high relative to bonds.”

(03/20/08)