Saturday, December 27, 2014

OIL SAUDI POWER Consumer benefits profits higher TURBULENCE for Banks Profits TAXPAYERSHOLDING THE BAG again

How solid is #BMO  Now at $70.22               http://www.nasdaq.com/symbol/bmo

668 706

Oil Price Winners and Losers Around the Globe

By Ian Talley
An oil offshore platform off the Angolan coast.
Agence France-Presse/Getty Images
As the world’s top policy makers rewrite their forecasts for global growth on oil’s price-plunge, who are the biggest winners and losers?

The Republic of Congo, Equatorial Guinea, and Angola–three West African nations that rely on oil to fund the lion’s share of their economy and state revenues–will likely be hit the hardest.

 The near-$40 a barrel fall in crude prices represents billions of dollars in lost revenue equivalent to roughly 20% of their gross domestic product.

For Djibouti, Seychelles and Kyrgyzstan, whose net oil imports take a huge chunk out of their economies, the decline in prices is a boon worth up to 11% of their GDP, allowing consumers to spend on goods and services that can fuel economic growth.

In dollar terms, the price drop translates into a $117 billion loss in revenues for Saudi Arabia if oil prices hold for another six to eight months, based on that country’s massive exports of crude.

 Russia, already in recession, could lose nearly $100 billion in revenues, almost 5% of the country’s GDP. Iran’s also in similar straits, maimed by international sanctions and a falling currency, with the price drop slicing off 5% of its GDP in revenues. 

And Kuwait could see its oil income fall by $32 billion, almost one-fifth of the country’s GDP.

For U.S. consumers, it’s an aggregate windfall worth $90 billion. It’s also a benefit equivalent to nearly a percentage point of GDP for China, Germany and France.

Trevor Houser, a partner at the Rhodium Group consultancy and a fellow at the Peterson Institute for International Economics, estimates major oil importing countries could cut their import bill in aggregate by more than $500 billion if the price fall is preserved well into 2015.

Both the International Energy Agency and former U.S. Energy Information Administration chief Guy Caruso predict oil prices are likely to remain lower for a while, barring a major disruption in supply.

“It’s highly unlikely OPEC gets their act together, so I see prices being weak for the next six months or so,” Mr. Caruso said.

Here’s a map of winners and losers around the world, followed by searchable table that indicates the potential impact on countries’ gross domestic product around the world. (Click on column headers to change rankings.)

Related coverage:
Falling Oil Prices Spur New Bets on Global Economic Growth
Lower Gas Prices: How Big a Boost for the Economy?
Gas at $3 Carries Rewards—and Risks
WSJ Survey: Oil Prices Are Near Their Bottom
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Friday, December 26, 2014

" BMO in the mix" Energy companies fuel loans record. Banks arranged $220.4 billion in 462 loans

Energy companies fuel loans record

 Expansion drives borrowing                              626

http://www.thestarphoenix.com/business/Energy+companies+fuel+loans+record/10681068/story.html


Canadian syndicated loan issuance climbed to a record this year as pipeline operators and energy firms fuelled loan renewals for expansion and acquisitions.

Banks arranged $220.4 billion in 462 loans for companies including Enbridge Inc. and Suncor Energy Inc. in 2014, up from $219.1 billion in 2013 and the fifth straight year of rising issuance, according to data compiled by Bloomberg.

Almost 80 per cent came from renewing revolving loans, and almost a quarter was lending to oil and gas companies, the data show.

"It is effectively companies building their business platform through acquisitions," Patrick Meneley, head of global corporate and investment banking at Toronto-Dominion Bank's TD Securities unit, said. "A lot of it is Canadian-based companies that are financing in our market and doing things outside of our market. That's really the story of syndicated loans and what drives the high levels of activity."

Canadian banks continue to expand lending even as U.S. syndicated-loan issuance shrinks. Companies borrowed $1.83 trillion this year in the U.S., while issuance for all of 2013 was $2.15 trillion, Bloomberg data show.

RBC Capital Markets extended its top ranking for syndicated loan issuance for a second year, providing $42.2 billion of loans for companies including Talisman Energy Inc. and Barrick Gold Corp. TD climbed to second spot from third in 2013 with $36.3 billion of loans, while Canadian Imperial Bank of Commerce rose to third from fourth with $34.6 billion in loans, Bloomberg data show.
 
Bank of Nova Scotia and Bank of Montreal's BMO Capital Markets ranked fourth and fifth. Rankings and data may change as more deals are recorded.

"All of these companies have liquidity facilities that are very important to them, and some are quite sizable," said Mark S. Chandler, head of Canadian syndicated and leveraged finance at RBC Capital Markets.

Oil-and-gas firms accounted for about 23 per cent of the borrowings this year, with about $53.4 billion in term loans, revolving credit lines and facilities, data compiled by Bloomberg show.

 Pipeline operators borrowed $20.8 billion, led by Calgary-based Enbridge, with $12.8 billion of revolving loans, and TransCanada Corp., with $3.65 billion of borrowings.

Other large borrowers included Montreal-based engineering firm SNC-Lavalin Group Inc., with $6.72 billion of borrowing, and Brookfield Asset Management Inc., with $4.47 billion, the data show. An investment-grade company in the BBB rating range is paying about 145 to 150 basis points more than bankers'
acceptances for a four-or five-year syndicated loan, little changed from a year ago, Chandler said.

The three-month Canadian dealer offered rate, based on bankers' acceptances, was 1.29 per cent yesterday.

Companies also tapped banks for $15.6 billion of term loans, often used to finance takeovers, up from $12.7 billion in 2013, Bloomberg data show.

"It's really a repeat of 2013 where you have Canadian borrowers taking advantage of an extremely stable bank market," Chandler said in a phone interview. "Basically, when that's happening they just continue to extend or refinance their bank facilities."
 
© Copyright (c) The StarPhoenix
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Saudi Arabia Ready For $20, $30, $40 Oil

Are WE ready: Saudi Arabia Ready For $20, $30, $40 Oil


http://oilprice.com/Energy/Oil-Prices/Saudi-Arabia-Ready-For-20-30-40-Oil.html

Brent crude and West Texas Intermediate (WTI) fell 2 and 3.3 percent respectively to start the week and Saudi Arabia is prepared to go much lower in a bid to trim the fat.

 Oil Minister Ali al-Naimi said as much in an interview with the Middle East Economic Survey on Monday. Naimi defended the Saudi position and made clear that OPEC nations will not cut production at any price.

His comments dismiss any notion of collusion with the United States and spell trouble for producers everywhere.

Since its November meeting, OPEC production has remained relatively steady while trending upward. Libya has had a few slip-ups and Venezuelan production is hurting, but the 12-member cartel exceeded their collective target for the sixth straight month, pumping 30.56 million barrels per day (mbpd).

The price however, has fallen roughly 20 percent in that period and shows no sign of returning to its June highs.

Related: OPEC Ministers Decry Price War Conspiracy Theories

For its part, Saudi Arabia accounts for nearly one-third of current OPEC production, or approximately 9.86 mbpd in the month of November. Still, production capacity is nearing 12 mbpd and Naimi suggested the oil-rich nation might put it to use sooner rather than later.

It’s all part of a plan to demonstrate that high-efficiency producing countries deserve the greatest market share – an idea Naimi describes as the operative principle of all capitalist countries.

OPEC produces around 40 percent of global output, but non-OPEC production is projected to grow 2.3 percent next year after a 3.5 percent expansion this year.
Non-OPEC Liquid Fuels Production

Source: EIA
Naimi’s argument obviously ignores the significant geopolitical factors present in oil trade, but is nonetheless a worthy defense.

 Among the non-OPEC low-efficiency producers, Saudi Arabia aims to squeeze out Russia – who they mentioned specifically – and particular plays across North America, where non-OPEC growth has been most rapid.


In Russia, President Vladimir Putin and Rosneft head Igor Sechin project calm despite the downward march of nearly every significant indicator of economic health.

 As the government searches for solutions to the ruble’s disastrous final quarter, Russia’s five leading oil exporters are under orders to sell part of their foreign exchange revenues in the next few months.

 The EIA predicts Eurasian production will see a drop of approximately 100,000 barrels per day (bpd) into next year.

Energy Minister Alexander Novak has yet to revise his production outlook, but admits oil exports will decline by 4.3 percent in 2015.

Related: OPEC Calls For Widespread Production Cuts

In North America, efficiency is not really the name of the game. In 2013, US shale accounted for approximately 20 percent of world oil investment while supplying only 4 percent of global production – numbers Naimi would deem unworthy of a market share, even if that market is domestic.

The side effects of oil’s decline are less evident to date, but that is not to say they have been completely absent. Despite overall growth, the EIA has lowered its expectation for US production in 2015 by 100,000 bpd.

 Layoffs are already underway at Halliburton and more are expected elsewhere. In all, US exploration and production spending is projected to fall by more than 35 percent if WTI averages $65 per barrel or below into 2015.

North of the border, Canada believes it can weather the storm. The oil sands, while more capital intensive up front, operate on much longer timelines than shale projects and those already online can breakeven at $40 per barrel.

Even so, a handful of Canadian oil companies are slashing their 2015 capital budgets and reducing output forecasts.

It’s unclear whether or not OPEC and Saudi Oil Minister Naimi are simply trying to put a scare into markets long enough to defend their market share – and if they can even keep up in this game of chicken – but the scare is there and the advantage is theirs.

By Colin Chilcoat of Oilprice.com
More Top Reads From Oilprice.com:
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Saturday, December 13, 2014

In defence of Trinity Western University

Pearl Harbour, Trinity Western University and the cost of waging war                                   362

http://www.donhutchinson.ca/pearl-harbour-trinity-western-university-and-the-cost-of-waging-war/
 
by
Please read this blog all the way through. At the end, I’m going to ask you to do something specific; and important.

It was December nearly 35 years ago that I visited Pearl Harbour and stood on the memorial bridge over the USS Arizona.

Commemorated on that spot is the unprovoked sacrifice that was made by many because of a pre-emptive military strike intended to keep the United States out of a war that they had already chosen not to engage in. Pearl Harbour changed that resolve and the future of a nation as the unwarranted attack on the USA brought them into World War II.
DonParlForum

This week, three and a half decades after my visit to Pearl Harbour, the combined pressure of three Canadian lawyers’ groups has induced the Government of British Columbia to fire the shot intended to sink Trinity Western University’s aspirations to develop a law school. The decision of BC’s Minister of Advanced Education is a critical turning point.

Trinity Western University is the little university that could.
Founded in 1962 as a college, in 1985 TWU received full accreditation as a university. A small, private university of 3,600 – not like the goliath-like structures of the 50,000 student University of British Columbia or 80,000 strong University of Toronto – TWU doesn’t dig into the public pot for its funding, but invites donations from its community of support and sets tuition fees to meet its needs.

This “little university that could” established a school of education, graduates of which the BC College of Teachers would only recognize if they completed an additional year at a public university. There was nothing wrong with TWU’s standard of education. In fact, TWU credits were fully transferable.

The issue was the religious beliefs of the TWU community, summarized in a community covenant that was developed and agreed to by faculty, staff and students. TWU considered the College of Teachers’ position to be discrimination based on religious beliefs.

The Supreme Court of Canada agreed, ruling in 2001 that the community covenant was appropriate for the private religious institution and that the professional body regulated only the behaviour of those academically qualified graduates who entered the profession, which TWU grads would be as long as the school met the academic standards established by the BC government and the College of Teachers.


In 2004 the Supreme Court offered similar advice in its decision concerning same-sex marriage. The court noted Canada is a nation that constitutionally provides for a diversity of individual and institutional opinions on marriage, and Parliament had the constitutional authority to decide only a civil definition of marriage.

 Parliament recognized this diversity, and particular protection for religious individuals and institutions in the ”expression of their beliefs in respect of marriage as the union of a man and woman to the exclusion of all others,” in the 2005 legislation changing the definition of civil marriage to “the lawful marriage of two persons.”


Since 2001 TWU has established several graduate schools, including a business school with an MBA program and a nursing school – with some of its nursing graduates recently honoured among Time magazine’s 2014 people of the year; the Ebola fighting medical team on the front lines of the disease.


Consistently recognized by Maclean’s magazine and the Globe and Mail as one of Canada’s top universities, TWU enlisted some of Canada’s leading lawyers and legal educators to develop the proposal for a school of law.

Only after every “t” was crossed and every “i” dotted did TWU send its proposal – for a privately funded law school that would add 60 seats per year to the 2,700 available law school capacity in Canada – to the Federation of Law Societies of Canada (the accrediting group approved by all of Canada’s law societies) and the BC Ministry of Advanced Education. Satisfying all academic and legal requirements, approval for the law school was given by both bodies.


Then, law societies (governing bodies for the practice of law) in Nova Scotia, Ontario and British Columbia disavowed their previously agreed standards by deciding, in similar fashion to the BC College of Teachers, they will not recognize academically and legally qualified graduates of TWU’s school of law because of a line in the university’s five page Christian community covenant that requires students, administrators and faculty to abstain from “sexual intimacy that violates the sacredness of marriage between a man and a woman.”


Canada has been here before. Not just in regard to TWU’s school of education. There was a time when people from stated faith or visible minority communities were not permitted to practice law. These egregious situations and others contributed to Canada’s development of what is now a world renowned human rights infrastructure, ultimately leading to the inclusion of the Canadian Charter of Rights and Freedoms in our constitution in 1982.


With all academic and legal requirements satisfied, Trinity Western University School of Law graduates are being excluded from the practice of law only because of their religious beliefs.

I share those religious beliefs, so maybe I’m next even though I didn’t attend TWU. At what point do the group of lawyers, self-identified LGBT activists and government officials standing against TWU decide they can force their beliefs on me, my church or you and yours?


Because of this unprovoked attack, TWU has become the focal point of the expensive process of fighting the battle for religious freedom in the courts.

TWU is the first law school applicant in the history of our nation to meet all the academic and legal criteria to open and then to have that taken away, because of its religious beliefs. TWU fought and won this battle in 2001. They shouldn’t have to fight it again… or alone.
Trinity Western University is not just the little university that could. It is the little university that can.

TWU president Bob Kuhn has said, “We remain committed to having a school of law and now have to carefully consider all our options.” The BC Minister of Advanced Education has said TWU may re-apply after the lawsuits with the law societies are resolved.
Trinity Western University needs our support.

Will you commit to joining me in prayer for TWU’s president Bob Kuhn, executive director of the law school Earl Phillips and other TWU staff, students and graduates?

Will you join me in offering financial support for the expensive process of fighting in the courts?

Here’s my challenge. As this year end approaches, send a donation to Trinity Western University for the law school in the amount of $10 for every $10,000 you earn per year.

If you make $50,000 a year that’s a $50 donation (for which you will get a tax deductible receipt) and leaves you plenty to give to support your other favourite charities. TWU has some difficult decisions to make in the next few weeks and the cost of going to court to defend the rights of Christians across Canada shouldn’t weigh on their minds.

Other organizations, good organizations, will be seeking your financial support to engage in this court battle; but none will be there if TWU doesn’t have the financial support to be there themselves.
Here’s the link to donate: http://twu.ca/giving/projects/school-of-law.html

And one more thing, please share this blog on your twitter feed, facebook wall, by email or however you can get the message out to others inviting them to stand with us as we stand with Trinity Western University!
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Friday, December 12, 2014

BMO HATEFUL BULLY. Trinity Western affair a trial of Canadian civility and tolerance


300

Trinity Western affair a trial of Canadian civility and tolerance

Lorna Dueck  Special to The Globe and Mail
Published
Last updated


Canada’s next chapter on going godless is gearing up for a nasty fight. It’s a David versus Goliath match over a proposed law school.

 For now, “David” is Trinity Western University, a Christian school funded solely by donations and unsubsidized tuition fees of its 4,000 students.

TWU is the financial and spiritual love child of thousands of evangelical Christians in Canada. 

The Globe and Mail Educational Survey has consistently given TWU a grade of A+ for its quality. Students and alumni of TWU range from former Members of Parliament, a former coach for the Vancouver Canucks, and many corporate, and non-profit innovators around the world.

 TWU’s published goal is to now “found a law school focused on law as public service, encouraging students to satisfy unmet needs for legal services and promote social justice.”

More Related to this Story

Enter Goliath: Law societies in Ontario, Nova Scotia, and the civil rights lawyer, Clayton Ruby are in court battles to shut the school down as discriminatory.

The five-page belief and behavioral covenant at TWU aspires to have students limit sexual activity to the Biblical definition of marriage; “between a man and a woman.”

Mr. Ruby approached B.C.’s gay community and found a plaintiff, Mr. Trevor Loke. 

“Mr. Loke had never heard of TWU, but when he heard there was a law school that was off limits to him in any meaningful way, that was an anathema, it was hateful,” Mr. Ruby told a Context TV debate.


“Let’s be clear here, we are not talking about acceptance of students, we are talking about while you are in law school here we are asking you to comply with this community covenant. 

We are not making it a term of acceptance that you not be gay, or deny that identity,” countered Earl Phillips of TWU.

Not all lawyers agree that gay rights are being violated in this case. Not all Christians agree a true expression of Christianity is being extended in this case. 

But at the core of this fight, this is not an argument over what kind of sex students should or shouldn’t be allowed to have.

What we’re really fighting over is the right to diversity. Lost in the fireworks of this case is that Canadian students choose TWU and its Covenant because it reflects their identity. 

Mr. Ruby’s and the law societies' fight imply that such identity can’t be trusted in their definitions of public life.

“Within the confines of religion, the most inane nonsense can be believed and practiced and passed on to one’s children. That’s freedom of religion, have a nice time.

 But when you go to the government and say I want your approval for this, I want tax status for this, then it’s beyond mere freedom of religion, there has to be a primacy for the right to equality,” Mr. Ruby said.

Also a human rights lawyer, Mr. Phillips left taking Charter law cases as a partner with McCarthy Tetrault to become Executive Director of TWU’s proposed law school. That is, if the school should ever be allowed to exist.

“Am I allowed as a Christian to state my beliefs, to live by them and fully participate in society? Is the humanist allowed to state his opinions and beliefs, and fully participate in society? 

We will not necessarily come to agreement when we discuss these things.

 A truly pluralist diverse society understands there are differences, allows for room for those differences, allows room for peaceable and respectful discussion and allows for the fact that we may still end up in disagreement. 

And yet we live and work together peaceably in this country. That is what I think we mean by respect,” said Mr. Phillips.

The most radical outcome of this case would be for the courts to decide that the two visions have to live side by side, with neither identity group able to force its morality on the other. 

Stretching and difficult, this is what it means to make space for authentic diversity in Canada. It’s a case where Canadian civility and tolerance is on trial.

 

More Related to this Story

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Wednesday, December 10, 2014

VIRAL SPIRAL Bank Of Montreal Stock Quote & Summary DataBMO$67.64*

SELL SELL SELL now get OFF the sinking ship

 Bank Of Montreal Stock Quote & Summary DataBMO$67.64*1.632.35%Read more: http://www.nasdaq.com/symbol/bmo#ixzz3LZ43ZdvU http://www.nasdaq.com/symbol/bmo

Bank Of Montreal Stock Chart

    http://www.nasdaq.com/symbol/bmo/stock-chart
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Tuesday, December 9, 2014

TOP TEN WHYs (still on) # 10 Oil price drop threatens to reduce revenues at Canada's top bank Historical Crude Oil Prices (Table) 1946 to present


Historical Crude Oil Prices (Table)   138

Blogger note: Stay tuned for 2014-15-16-17-

http://inflationdata.com/Inflation/Inflation_Rate/Historical_Oil_Prices_Table.asp

Annual Average
Domestic Crude Oil Prices
(in $/Barrel)
1946-Present
YearNominal PriceInflation Adjusted Price
1946$1.63 $19.23
1947$2.16 $22.60
1948$2.77 $26.96
1949$2.77 $27.22
1950$2.77 $26.96
1951$2.77 $24.96
1952$2.77 $24.41
1953$2.92 $25.48
1954$2.99 $26.05
1955$2.93 $25.55
1956$2.94 $25.32
1957$3.14 $26.13
1958$3.00 $24.32
1959$3.00 $24.07
1960$2.91 $23.04
1961$2.85 $22.30
1962$2.85 $22.04
1963$2.91 $22.24
1964$3.00 $22.63
1965$3.01 $22.33
1966$3.10 $22.34
1967$3.12 $21.88
1968$3.18 $21.35
1969$3.32 $21.18
1970$3.39 $20.43
1971$3.60 $20.80
1972$3.60 $20.14
1973$4.75 $24.82
1974$9.35 $44.29
1975$12.21 $53.04
1976$13.10 $53.86
1977$14.40 $55.55
1978$14.95 $53.65
1979$25.10 $80.14
1980$37.42 $106.36
1981$35.75 $92.10
1982$31.83 $77.21
1983$29.08 $68.32
1984$28.75 $64.75
1985$26.92 $58.54
1986$14.44 $30.80
1987$17.75 $36.54
1988$14.87 $29.45
1989$18.33 $34.58
1990$23.19 $41.40
1991$20.20 $34.70
1992$19.25 $32.09
1993$16.75 $27.13
1994$15.66 $24.71
1995$16.75 $25.72
1996$20.46 $30.50
1997$18.64 $27.17
1998$11.91 $17.10
1999$16.56 $23.20
2000$27.39 $37.19
2001$23.00 $30.40
2002$22.81 $29.64
2003$27.69 $35.22
2004$37.66 $46.60
2005$50.04 $59.88
2006$58.30 $67.63
2007$64.20 $72.30
2008$91.48$99.06
2009$53.48 $58.20
2010$71.21$76.38
2011$87.04$90.52
2012$86.46$88.11
2013 $91.17$91.54
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Sunday, December 7, 2014

The Great debacle from the top 6 to the bottom ??? BMO SHARES

105
PreVISION
PreDICTION : BMO shares will hit 2000 levels and maybe 1996 levels  2015-17.

Bloggers Note: 2000 below $40.00   1996 below $20.00
May settle at  slightly above $42.00  by the end of 2017.

The Great debacle from the top 6 to the bottom ???


Comprehensive Quote4:00 PM 12/05/14


  • $80.27 CAD

  • 0.06 0.07%

  • Volume 2,153,570
    • Volume2,153,570
    • 65 Day Avg Vol1,308,074
    • 1 Day Range79.47 - 80.86
    • 52 Week Range67.04 - 85.71 (02/05/14 - 09/18/14)
    12/02/14, 10:20 AM
     CA:BMO: 81.62
    ec 1Dec 2Dec 3Dec 4Dec 5
    $80$78$82$84
    Compare
    • Compare to Benchmark:
    • DJIA
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    • GLOBAL DOW
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    • Financials
    • Compare to
    • Today's Open 80.74
    • Prior Day Close 80.21 (12/04/14)
    • Performance Today
    • BMO 0.07%
    • DJIA 0.33%
    • S&P 500 0.17%
    • Financials 0.86%







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    TOP TEN WHYs # 10 Oil price drop threatens to reduce revenues at Canada's top banks I see $67.00 US a Barrel ...and $0.77 a litre "So we'll See"

    Oil price drop threatens to reduce revenues at Canada's top banks

    Oil and gas companies form important part of banks' investment and corporate services client base

    The Canadian Press Posted: Dec 07, 2014 9:54 AM MT Last Updated: Dec 07, 2014 5:13 PM MT
    The slump in oil prices has energy sector stocks falling and they are pulling down others in areas linked to oilpatch production.77
    The slump in oil prices has energy sector stocks falling and they are pulling down others in areas linked to oilpatch production. (Aaron Vincent Elkaim/Canadian Press)
    Oil prices that reached a five-year low on Friday are starting to take a bite out of profits at TD Bank and are raising concerns for the rest of the country's top lenders.

    Canada's biggest banks earn up to 20 per cent of their revenues through providing investment and corporate banking services, with oil and gas companies an important part of that client base.
    But oil prices have tumbled roughly 35 per cent to under $70 a barrel from their mid-summer highs due to a strong U.S. dollar, low demand and a glut of global supply, and now TD Bank says it will have to look beyond the oilpatch to make up its investment banking revenue.

    "With the current activity going on in oil pricing, it certainly is impacting activity levels in the business," Bob Dorrance, the head of TD's wholesale banking division, told investors during a conference call earlier this week after the bank reported its fourth quarter results.

    "Things have slowed down."

    Scotiabank was the last of Canada's five big banks to report its quarterly earnings this week, wrapping up a series of conference calls that were peppered with talk about falling oil prices.

    Energy sector dragging down stocks

    The energy sector — a major weight on the Toronto Stock Exchange — has taken a beating on the markets and has taken other stocks,  including those with indirect exposure to companies that produce crude, down with it.

    While all of the country's top lenders reported substantial profits during the quarter, Canaccord Genuity analyst Gabriel Deschaine noted that lacklustre performance on the stock markets caused many of the banks to report weaker than expected revenues from their brokerage businesses.

    Scotia Capital analyst Sumit Malhotra says roughly 30 per cent of the underwriting fees — fees from administering new issues on the stock markets — earned by Canada's six top banks this year came from the energy sector.

    A drop in commodity prices could make resource companies less likely to make a public offering on the market, said Malhotra, pointing to Teine Energy as an example. 

    The Canadian oil and gas producer had been planning an initial public offering but a Bloomberg News report in October said the company delayed the debut due to the decline in oil prices.

    "While we do not want to be too alarmist in this regard, it should be clear that the capital markets operations of the banks have played a key role in driving revenue and earnings growth for the Canadian banking sector in 2014, and any sustained period of weakness in the energy sector would be detrimental to activity levels going forward," Malhotra wrote in a note to clients.
    WEEKLY CRUDE OIL PRICE

    Banks doing stress tests on loans

    The plummeting oil prices have also caused some concerns about whether oilpatch companies will default on their loans and create financial burdens for the banks.

    The big banks say they are regularly performing stress tests on their loan portfolios to see how they will fare in a continued low oil price environment. 

    So far they say there is no cause for concern, even if oil drops down to $60 a barrel and stays that way for up to two years.

    "With oil prices, it's always about how long it goes on for," RBC's chief risk officer Mark Hughes told investors during the bank's fourth quarter conference call on Wednesday.

    Nonetheless, chief risk officers at all of the big banks say they are keeping tabs on the situation.

    "If oil prices remain depressed, there will be some strain on some of these loans," BMO's chief risk officer Surjit Rajpal told investors during a conference call about the bank's fourth quarter results Tuesday.

    Malhotra notes that oil and gas related loans make up only about six per cent of the banks' combined business loan portfolios, and only two per cent of their entire combined loan book.

    "Though an extended period of weakness in energy prices would clearly impact credit quality trends, in our view the size of the portfolio is not large enough to materially weigh on either credit or growth trends," Malhotra said.

    However, there is another way that slumping oil prices could reduce the quality of the banks' loan books.

    "I'm looking more at what this means at the guys working the oil fields," said Morningstar equity analyst Dan Werner. "Are they going to be out of a job because rigs are going to be shutting down? It doesn't sound like it at this point because I think the base cost of extraction is below where the price is."

    But if plunging prices leave workers unemployed, that may leave them unable to make their mortgage payments, said Werner. That, in turn, would hurt the banks.

    "Right now the evidence doesn't seem to be there in terms of wells being shut down yet," said Werner. "So we'll see."


    http://www.cbc.ca/news/canada/calgary/oil-price-drop-threatens-to-reduce-revenues-at-canada-s-top-banks-1.2863543?cmp=fbtl&utm_content=bufferf08e0&utm_medium=social&utm_source=facebook.com&utm_campaign=buffer
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