BMO facing $12bn outlay

by Dave Nixon

Story link: BMO facing $12bn outlay

Canada’s BMO Financial will make available up to US$12.2bn, or approximately 3 per cent of its assets, in liquidity support for two structured investment vehicles that it is looking to wind down.

The group, centred on the Bank of Montreal, will take C$490m in pre-tax charges on its exposure to ACA, the monoline insurer, and additional investments hit by credit market turmoil. The most recent charges follow a C$680m loss last year on natural-gas trading.

The bank in addition announced the appointment of a new chief risk officer and reallocated the chief executive of its investment banking division, Yvan Bourdeau, to vice-chairman. The charges are anticipated to lower earnings by 70 cents a share, or C$325m, for the first quarter ended January 31.

The extent of the backstop financing for the two SIVs prompted some analysts to cut their ratings on BMO shares, which closed about 1 per cent lower on Tuesday at C$52.70.