CALGARY - Ontario and Quebec have agreed greenhouse gas emissions must be considered when it comes to the proposed cross-Canada Energy East pipeline.
But the new boss of the National Energy Board, the agency tasked with weighing the $12-billion proposal, said climate change policy isn't within its purview and the board doesn't intend for its hearings to become bogged down in that debate.
Ontario and Quebec, two of the six provinces Energy East would traverse as it carries crude from Alberta to the East Coast, announced a raft of agreements on Friday, including on energy matters.
Premiers Kathleen Wynne and Philippe Couillard on Friday agreed to build "a stronger and more competitive low-carbon economy" to fight climate change and set out a list of "principles" for new oil pipelines in their provinces.
One of those would be to "take into account the contribution to greenhouse gas emissions."
NEB chair and CEO Peter Watson, who's been in the job for three months, said the NEB weighs the emissions pipelines themselves generate â€” a minuscule amount.
But, much to the chagrin of pipeline critics, Watson said it's not the board's job to look at a project's enabling role in oilsands growth and the rising carbon dioxide emissions that would accompany that development. Nor is it the board's job to look at how crude products are burned for energy at the other end of the pipe.
That authority rests with provinces and other regulators, he said.
"Our job is to assess the need for new cross-border energy infrastructure and to make sure it can be constructed and operated safely and in the public interest," Watson said in a speech to the Economic Club of Canada on Friday.
"Our job is not to conduct a referendum on society's use of fossil fuels every time a proponent proposes to build a section of pipe."
Watson also said reviews must be conducted in a timely manner, but that he "won't hesitate" to extend the legislated 15-month time limit if more information is needed or more stakeholders need the chance to be heard.
Watson said the energy board used to garner little attention, but now he's in the "eye of the storm" as the issue of pipeline safety rises in the public's consciousness. Last year, the board fielded 600 inquiries from the media, compared with just 80 in 2008.
The company proposing to build Energy East, TransCanada Corp. (TSX:TRP) filed its application â€” all 30,000 pages of it â€” to the NEB last month.
The project would connect more than one million barrels a day of Alberta crude to export points and refineries in Quebec and New Brunswick, making use of a repurposed natural gas pipeline for two thirds of the way and building new pipe for the rest.
Besides emissions, Ontario and Quebec's other oil pipeline principles centre on safety, emergency response, aboriginal consultation, economic benefits, the company's responsibility to address a spill and the interests of natural gas consumers.
"We are studying these principles and look forward to working with both governments in the appropriate manner to make the project successful," said TransCanada spokesman Tim Duboyce, adding the project would create thousands of jobs and bring in billions of tax revenue in the two provinces.
Federal Natural Resources Minister Greg Rickford said he doesn't think of the demands by Ontario and Quebec as a lack of confidence in the NEB process.
"They just want to make sure that their interests are represented and that's a conversation that goes directly, in this instance, between TransCanada and those provinces."
Alberta Premier Jim Prentice said he's not concerned Ontario and Quebec may stand in the way of the project.
"This project is a nation building project and I take the comments that they made in that spirit," he said, adding he plans to meet with his counterparts in both provinces in the weeks ahead.
"I think we can all work together and I think we can do business together."
Tim Gray of Environmental Defence said Ontario and Quebec have "shown leadership" with Friday's environmental announcements.
"Specifically, the announcement says that the pipeline must ensure environmental protection and social acceptance," he said.
"Given that the Energy East pipeline is incompatible with these goals, it is our understanding that the pipeline must be rejected by both provinces."
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WASHINGTON - House Republicans filed a federal lawsuit Friday accusing the Obama administration of exceeding its constitutional powers in carrying out President Barack Obama's prized health care law, giving legal voice to conservatives who have long protested that he has abused his office's authority.
Democrats said Obama had acted legally and mocked the case as an unwinnable, politically motivated attack. Legal experts expressed doubts that the GOP would prevail or that the case could be concluded during Obama's presidency.
The suit echoed Republican complaints over Obama's Thursday night announcement of executive actions preventing the deportation of 5 million people who immigrated to the U.S. illegally. GOP lawmakers said those unilateral steps were unconstitutional and have promised unspecified congressional action.
Friday's lawsuit did not address immigration, though a Republican official said party leaders might add that later. The official spoke on condition of anonymity to describe internal Republican deliberations.
House Speaker John Boehner, R-Ohio, said Obama "has chosen to ignore the will of the American people" and cast the battle as one with important implications.
"If this president can get away with making his own laws, future presidents will have the ability to as well," said a Boehner written statement. "The House has an obligation to stand up for the Constitution."
In the past, Republicans have accused Obama of overreaching by trading five Taliban prisoners for captured Army Sergeant Bowe Bergdahl and blocking earlier deportations of immigrant children illegally in the country.
White House spokesman Eric Schultz said the public wants Washington to focus on improving the economy but "Republicans choose to sue us, sue the president for doing his job."
In a written statement, House Minority Leader Nancy Pelosi, D-Calif., called the lawsuit "a bald-faced attempt to achieve what Republicans have been unable to achieve through the political process." She said Republicans were responding to "the howls of impeachment-hungry extremists."
Pelosi also complained that Republicans found "a TV lawyer" who'll cost taxpayers too much â€” $500 hourly, according to the contract. The lead attorney, George Washington University law professor Jonathan Turley, has done legal commentary on television networks.
Wasting little time, the House Majority PAC, a Democratic campaign committee, blasted a fundraising email to supporters calling the suit "an obvious political stunt to rile up Boehner's Tea Party allies."
Congressional Republicans all opposed the health care overhaul, and the House has voted over 50 times to repeal it.
Friday's suit, filed against the departments of Health and Human Services and the Treasury, was assigned to U.S. District Judge Rosemary Collyer, a 2003 appointee of President George W. Bush.
It accuses Obama of unlawfully delaying the 2010 health care law's requirement that many employers provide health care coverage for workers.
That so-called employer mandate requires companies with 50 or more employees working at least 30 hours weekly to offer health care coverage or pay fines. Smaller businesses are exempt.
The requirement was initially to take effect this year. Now, companies with 50 to 99 employees have until 2016 to comply while bigger firms have until next year.
The suit also accuses Obama of illegally preparing to pay insurance companies an estimated $175 billion over the next decade â€” plus $3 billion paid this past year â€”even though Congress hasn't provided money for that purpose.
According to the suit, insurance companies providing coverage under the health law must offer reduced rates to many lower-income policyholders.
The law established a fund to reimburse insurers who do that. Congress hasn't put money into that fund but the administration has started paying insurance companies anyway, the suit says.
University of Richmond law professor Carl Tobias said it would be difficult for the House to prove its case or even get the courts to hear it because of their traditional reluctance to intervene in political disputes between Congress and the president.
Timothy Lewis, a former federal appeals court judge nominated by President George H.W. Bush, said caseloads and potential appeals make it doubtful the case would be finished during Obama's final 26 months in office.
The House authorized the lawsuit in a near party-line vote in July.
AP Special Correspondent David Espo, reporter Donna Cassata and AP White House Correspondent Julie Pace contributed to this report.
BEIJING, China - China's central bank unexpectedly slashed interest rates on Friday to re-energize the world's No. 2 economy, joining a growing list of major economies that are trying to encourage growth in the face of a global slowdown.
The president of the European Central Bank said Friday he was ready to step up stimulus for the 18-country eurozone economy, where growth is meagre and unemployment is soaring. And Japan's government this week delayed a tax increase after the country slipped back into recession. Japan's central bank late last month increased its purchases of government bonds and other assets to try to revive growth.
News of China's actions and the ECB's hints of further stimulus triggered a surge in stock markets, particularly in Europe. Germany's DAX rose 2.6 per cent, while the Dow Jones industrial average rose 0.5 per cent to close at a record high. Asian stocks had closed before the Chinese announcements.
Friday's moves highlighted an increasing divide in the global economy. The United States is showing signs of steady growth, prompting the Federal Reserve to rein in its stimulus efforts.
So far, the U.S. has escaped any drag from the slowdown overseas. Fed policymakers said at a meeting last month that the impact on the U.S. would be "quite limited."
Jay Bryson, a global economist at Wells Fargo Securities, said the U.S. is "relatively insulated" from overseas developments. Exports are a smaller source of growth than in other developed nations and many major employers, such as health care and education providers, are largely unaffected by overseas activity.
The slowdown in global growth is becoming an increasing concern for policymakers. Japan confirmed this week that it has fallen back into recession and will delay a tax increase to help consumer spending.
In Europe, it is not only weak growth but also the low inflation rate that is worrying the ECB. Low inflation or an outright drop in prices can weaken an economy further by encouraging delays in spending and investment. The economy of the 18-country eurozone grew by a scant 0.2 per cent in the third quarter compared with the previous three months.
As indicators for the eurozone and global economy disappoint, ECB President Mario Draghi was firm in his message: "''We will do what we must to raise inflation and inflation expectations as fast as possible," he said in a speech in Frankfurt.
Of major economies, only the U.S. is considering raising interest rates. The Federal Reserve only recently ended a massive bond-buying program that helped reduce market interest rates because the economy is strengthening.
But the prospect of higher rates in the U.S. is exposing the country to a potentially painful rise in the dollar â€” currencies tend to strengthen with higher rates. The dollar hit a seven-year high against the yen, and jumped almost 1 per cent against the euro on Friday. A stronger dollar makes it tougher for U.S. exporters to sell their goods internationally.
The People's Bank of China said it is trying to address "financing difficulties" caused by a shortage of credit. It also said the move was not a change in monetary policy and economic conditions are within an "appropriate range."
China's economic growth fell to a five-year low of 7.3 per cent in the latest quarter and manufacturing and other indicators are declining. That has prompted suggestions Beijing might intervene to prop up growth.
The rate charged by banks for loans to each other rose this week to its highest level since early October, reflecting reduced availability of credit, a concern for Chinese economic planners.
"If necessary, the central bank will provide timely liquidity support," or extra credit to markets, it said in a separate statement.
The bank cut the rate on a one-year loan by commercial banks by 0.4 percentage points to 5.6 per cent. The rate paid on a one-year savings was lowered by 0.25 point to 2.75 per cent.
It was the first rate cut since July 2012, and comes after the Cabinet called this week for steps to reduce financing costs for industry to make the economy more efficient.
Bryson of Wells Fargo Securities said the bank's move would have only a limited impact on China's economy. But it does signal that Chinese officials' concerns about growth are rising, he said, a sign they may take further steps in the coming months.
In China, changes in interest rates have a limited direct effect on the government-dominated economy but are seen as a signal to banks to lend more and to state companies that they are allowed to step up borrowing.
"The reduction in the benchmark lending rate will mainly benefit the larger, typically state-owned firms that borrow from banks," said Mark Williams of Capital Economics in a report. Most of China's private companies cannot get loans from the state-owned banking industry and rely on an underground credit market.
"This does not necessarily signal that policymakers are going back on efforts to support smaller companies, or giving up on 'targeted easing,' but they apparently feel larger firms are now in need of support too."
AP Economics Writer Christopher S. Rugaber contributed to this report.
TORONTO - Some of the most active companies traded Friday on the Toronto Stock Exchange:
Toronto Stock Exchange (15,111.13, up 35.95 points):
B2Gold Corp. (TSX:BTO). Miner. Down one cent, or 0.48 per cent, to $2.06 on 6.8 million shares.
Teck Resources Ltd. (TSX:TCK.B). Miner. Up $1.72, or 9.44 per cent, $19.94 on 6.5 million shares.
Bombardier Inc. (TSX:BBD.B). Communication equipment. Down one cent, or 0.23 per cent, to $4.28 on 5.6 million shares.
Athabasca Oil Corp. (TSX:ATH). Oil and gas. Up 18 cents, or 5.96 per cent, to $3.20 on 4.5 million shares.
Romarco Minerals Inc. (TSX:R). Miner. Down one cent, or 1.54 per cent, to 64 cents on 4.1 million shares.
Carlisle Goldfields Ltd. (TSX:CGJ). Miner. Down half-a-cent, or 11.11 per cent, to four cents on 4.06 million shares.
Companies reporting major news:
Royal Bank (TSX:RY). Financial services. Down 51 cents, or 0.51 per cent, to $82.53 on 1.6 million shares. Canada's largest bank said it would exit its international client wealth management business in the Caribbean and other international private banking groups. RBC wouldn't confirm a Financial Post report that the move could affect more than 300 brokers and private bankers. The move came as the bank prepares to post quarterly and full fiscal year earnings on Dec. 3.
OTTAWA - Rural residents shouldn't see the propane price hikes and supply shortages this winter that they experienced during the last heating season, the country's energy regulator predicts.
The National Energy Board â€” which last year at this time anticipated stable prices based on forecasts of warmer-than-normal temperatures â€” says the country's propane market is better prepared for what lies ahead in the next few months.
And it says the prediction should hold true even if there's another so-called Polar Vortex winter and higher agricultural demand in the United States.
"The weather that we experienced a year ago was kind of off people's radars," said Darren Christie, the board's director of energy trade.
"It really looks like the industry has learned its lesson and is taking a more cautious approach," he said in an interview Friday.
The prediction comes as much of Canada experiences a November freeze and parts of New York state grapple with record amounts of snow from isolated, lake-effect storms.
The sudden colder temperatures saw natural gas futures rise this week as the weather spurred demand.
Temperatures are expected to be below normal across eastern parts of Canada and the U.S. over the next five days, according to Environment Canada.
But propane inventories in Canada were at an 11-year high at the beginning of November and at record highs in the U.S., "driven largely by record Gulf Coast storage levels," the board said in its market snapshot.
The surge in supply comes despite predictions of another record corn harvest south of the border.
Last year's sizable harvest came in late and wet and producers used so much propane to dry it that inventories of the fuel in the U.S. Midwest fell by 30 per cent in a two-month period that ended in December 2013.
Early indications this year suggest the demand for propane to dry crops won't reach those levels, the NEB said.
Winter weather is always a wild card for the propane market, the board noted in its snapshot report.
And both Environment Canada and the U.S. Climate Prediction Center call for an average to warmer-than-average winter in key propane-consuming regions, including Ontario and the midwest and northeast regions of the U.S.
But even if this winter brings a deep freeze similar to last year, the propane market is better positioned to deal with it, said the report.
And stronger propane production and lower agricultural demand should result in more stable prices for the current heating season, said Christie.
"Even if we got the weather that we had last year, we would be in somewhat better position," he said.
"So we shouldn't see quite the spike in prices."
Still, the energy market continues to suffer a bit of a hangover from last year.
Statistics Canada said Friday that energy prices were up 4.2 per cent in October, mostly driven by last winterâ€™s spike in propane and natural gas prices.
Farmers and other rural residents most affected by fluctuations in the propane market were left reeling last year when prices for the fuel more than doubled in central Canada and rose significantly above five-year averages in other parts of the country.
The unexpected price jumps â€” combined with fuel rationing by propane sellers â€” sparked an investigation by the Competition Bureau and the NEB after the federal Natural Resources and Industry departments came under pressure to take action.
The investigation produced two reports that ultimately blamed the problems on the uncertainty of weather forecasts and shortcomings in the propane supply chain.
TORONTO - The Toronto stock market closed higher Friday, with commodity prices and resource companies advancing amid signs that central banks are prepared to step up efforts to keep the fragile global economic recovery going.
The S&P/TSX composite index climbed 35.95 points to 15,111.13.
China's central bank cut its interest rates and promised to inject extra credit into the financial system if needed. And the head of the European Central Bank said the ECB is willing to "step up the pressure" and broaden its efforts to stimulate the struggling eurozone economy.
The Canadian dollar also made a solid advance, up 0.53 of a cent to 88.98 cents US, as higher than expected inflation in October raised speculation about when the Bank of Canada might hike interest rates. Statistics Canada said inflation rose by 0.1 per cent from September â€” pushing the annual inflation rate to 2.4 per cent. Economists had been looking for a drop in October.
U.S. indexes charged ahead with the Dow Jones industrials up 91.06 points to 17,810.06, the Nasdaq advancing 11.1 points to 4,712.97 and the S&P 500 index climbing 10.75 points to 2,063.5.
China's central bank cut the interest rate on its one-year loans to financial institutions by 0.4 of a percentage point to 5.6 per cent. The country's annual rate of economic growth slowed to a five-year low of 7.3 per cent last quarter. The move by the central bank came a day after the release of data showing that Chinese manufacturing activity fell to a six-month low in November.
"Itâ€™s a strong move," said Jean-Francois Dion, portfolio adviser at wealth management, RBC Dominion Securities.
"At the same time, demand from emerging economies had been really driving demand for resources over the past few years. Slowing growth has been weighing on our resource sector in Canada and that explains the strength of the bounce weâ€™re seeing today."
Many analysts think a key motivation behind China's rate cut has been the recent sharp fall in the value of the Japanese yen, which is likely to have an impact on China's exports.
Meanwhile, the ECB's Mario Draghi said that if current efforts do not achieve the desired effect, the bank could "broaden even more the channels through which we intervene." For many in the markets, that was a clear hint that the bank could soon starting buying government bonds.
While China's growth has been slowing, conditions in the eurozone are much worse with the region teetering on the edge of recession, as indicated in data out Thursday from financial information company Markit. Its purchasing managers' index for the eurozone, a broad gauge of business activity, fell to a 16-month low in November.
The move by the Chinese central bank in particular pushed the base metals group up 5.75 per cent as December copper gained one cent to US$3.06 a pound. A major beneficiary was Teck Resources, up $1.72 or 9.44 per cent to $19.94.
January crude in New York ahead 66 cents at US$76.51 a barrel and the energy sector climbed 1.8 per cent.
The TSX gold sector slipped about 0.1 per cent as December bullion advanced $6.80 to US$1,197.70 an ounce.
The financials sector was weak with Royal Bank (TSX:RY) down 51 cents to $82.53 as the bank said would exit its international client wealth management business in the Caribbean and other international private banking groups. RBC wouldn't confirm a Financial Post report that the move could affect more than 300 brokers and private bankers. The move by RBC came as the bank prepares to post quarterly and full fiscal year earnings on Dec. 3.
The TSX ended the week up 268 points or almost two per cent, leaving the market up 11 per cent year to date.
TORONTO - Ontario and Quebec signed several agreements on Friday promising to co-operate on trade, climate change, energy projects and alcohol sales at a joint meeting of the two provinces' Liberal cabinets in Toronto.
Premiers Kathleen Wynne and Philippe Couillard agreed to build "a stronger and more competitive low-carbon economy" to fight climate change, but wouldn't say when people could start paying a carbon tax.
"We believe that putting a value on carbon is very important," Wynne said following the meeting. "We've been supportive of cap-and-trade process for many years, and we are continuing to have that discussion with Quebec."
For his part, Couillard said he sees opportunities to grow the economy as new technologies are developed to reduce greenhouse gases.
"Nobody talks about the cost of not fighting climate change," he said. "This cost is passed to citizens too, whether it's health care, coastal erosion or spectacular weather events. This is hugely expensive for our society."
The premiers also signed agreements on electricity, with Ontario making 500 megawatts available to Quebec in the winter, when Quebec has greater demand to heat homes, with Quebec returning the favour in the summer months when Ontario's demand is greater because of air conditioners.
"We have complimentary supply and complimentary needs, and there's a simplicity and elegance to the solution that we brought forward today in terms of the seasonal needs of the two provinces," said Wynne.
She rejected suggestions that more power from Quebec might allow Ontario, which already shut down all coal-fired generation, to reduce its reliance on nuclear power.
"We're not anywhere near having a conversation like that," added Wynne.
Couillard and Wynne also agreed projects like the Energy East pipeline, which would carry oilsands crude to refineries on the East Coast for export overseas, should proceed only when they are environmentally sustainable and have local support.
"We basically are signing off on seven principles," said Wynne. "We're talking about compliance with the highest available technical standards, contingency planning and emergency response programs, making sure proponents and governments fulfil their duties to consult with First Nations."
Ontario and Quebec hope Alberta Premier Jim Prentice agrees the seven principles are reasonable, added Wynne.
The premiers directed the Liquor Control Board of Ontario and its Quebec equivalent, (the Societe des Alcools du Quebec), to find ways of allowing the sales of locally produced alcoholic beverages from each province through their respective liquor stores.
Couillard also threw his support behind Wynne's efforts to secure a meeting with Prime Minister Stephen Harper, something he's had no trouble arranging for himself.
"We are showing today how governments can work well together," said Couillard. "That's the way to do it in Canada, we are a federation, so I'm sure that every premier should have the opportunity of talking to, or meeting with, the prime minister."
Wynne said she doesn't know why Harper is refusing to meet with the premier of the most populous province in the country.
"You'll have to ask Prime Minister Harper why it's not possible for him to have a meeting with me," said Wynne. "I will continue to ask for that meeting."
The premiers also signed a declaration affirming a shared commitment to protecting and promoting Francophone culture and heritage.
"We talked about the Francophonie as part of Canada's DNA," said Couillard.
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SPRINGFIELD, Ill. - An Illinois judge ruled Friday that a law intended to fix the nation's worst state employee pension crisis violates the state constitution, deciding in favour of state employees and retirees who sued to block the landmark overhaul.
The overhaul had been approved by lawmakers and Democratic Gov. Pat Quinn last year. Years of underfunding had put the state's pension systems roughly $100 billion short of what they need to cover benefits promised to employees.
Quinn's office released a statement saying it anticipated legal challenges and would urge the Illinois Supreme Court to take up the matter quickly.
"We're confident the Illinois Supreme Court will uphold this urgently needed law that squarely addresses the most pressing fiscal crisis of our time," Quinn spokesman Grant Klinzman said in a statement.
If the ruling by Sangamon County Circuit Judge John Belz is upheld, lawmakers would have to go back and come up with another plan.
That would be yet another financial challenge for the incoming Republican governor, Bruce Rauner, who takes office in January and opposes the current pension law.
The overhaul reduces benefits for retirees to significantly cut the debt, but also reduces employee contributions. The lawsuit said the constitution prohibits reducing benefits or compensation once they're promised.
Illinois argued that pensions are a "contractual agreement," which the government may modify, particularly in a crisis. In this case, it said the state faced a fiscal emergency.
"The court held today, as our unions have long argued, that the state cannot simply choose to violate the constitution and diminish or impair retirement benefits if politicians find these commitments inconvenient to keep," said a statement from We Are One Illinois, a coalition of unions opposed to the pension overhaul.
While litigants initially didn't think the case would be settled before 2015, Belz said in September he'd like to quickly move any challenge over the pension overhaul to the Supreme Court.
His action follows a July Supreme Court ruling that requiring state retirees to pay more for health insurance was unconstitutional. Belz had called that ruling "an elephant in the room," increasing speculation that the pension overhaul could suffer the same fate.
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MONTREAL - Quebec environmentalists are hailing a report the provincial government has imposed various conditions on TransCanada for the Energy East pipeline to be accepted.
Radio-Canada says it has obtained the list of conditions in a letter from Environment Minister David Heurtel to the Calgary-based pipeline company.
The government reportedly wants TransCanada Corp. (TSX:TRP) to ensure the project is socially acceptable, conduct an environmental assessment and provide a plan that would guarantee emergency measures of a high standard.
It also wants the company to assume full economic and environmental responsibility in the case of any leak.
According to the CBC's French-language network, the letter stipulates the project must generate economic benefits for Quebec as a whole as well as respecting agreements with First Nations.
The proposed Energy East pipeline would carry oilsands crude to refineries on the east coast for export overseas and require construction of two marine facilities â€” one on the Gulf of St. Lawrence near Quebec City and one Saint John, N.B.
The company says the project would help support thousands of jobs across the country and generate billions of dollars in government tax revenues.
It also states it will provide the safest and most efficient access to markets for Canada's growing crude oil production.
Concern about the pipeline has been growing, however, particularly in Quebec.
Earlier this fall, Quebec Superior Court slapped an injunction on TransCanada to halt exploratory drilling at its planned oil export facility at Cacouna on the St. Lawrence River.
The injunction had been sought by Quebec-based environmental groups concerned about the impact of the drilling on a beluga whale calving ground around Cacouna.
And about two weeks ago, Quebec's national assembly unanimously adopted a motion asking the provincial government to assert its jurisdiction over the environment and to hold its own hearings on the Energy East proposal, including the pipeline's potential impact on greenhouse gas emissions and climate change.
The motion was in response to the National Energy Board's refusal to consider the impact on climate change in its assessment of the project and the federal government's failure to regulate carbon emissions by the oil and gas sector.
TORONTO - The decision by Royal Bank (TSX:RY) to exit its wealth management business in the Caribbean may be another sign that Canadian banks are cutting their losses in the region and cleaning house, an analyst said Friday.
"What we're seeing is the banks are doing a thorough evaluation of their business mix and figuring out what makes sense long term and what is probably best left in the hands of someone else," said Craig Fehr, an analyst with Edward Jones in St. Louis, Mo.
Canada's largest bank said the Caribbean move, which follows the sale of its Jamaican operations earlier this year at a loss, will affect international wealth management teams in Toronto, Montreal and the U.S., and result in an undetermined number of job losses.
One media report stated the restructuring would affect about 300 employees, a figure that RBC refused to confirm.
"While regrettably there will be some job losses, it would be premature at this stage to estimate the number of employees that will be impacted as we are currently considering a number of strategic options for these businesses," RBC spokeswoman Claire Holland said in an email.
RBC said these efforts will help the bank focus on serving high net worth and ultra-high net worth clients in key areas for expansion, including Canada, the U.S., the British Isles and Asia.
Its RBC Suisse business in Europe will also undergo a strategic review.
This move by RBC follows a similar one announced earlier this month by Scotiabank (TSX:BNS), which is planning to cut 1,500 jobs â€” about two-thirds of them in Canada. None of its domestic branches is slated for closure but Scotiabank said its international banking arm will shut 120 of its foreign branches, including some in Mexico and the Caribbean region.
CIBC (TSX:CM), which has maintained a presence in the Caribbean since the 1920s, said in September that it planned to focus on managing expenses amid challenges in the region.
Fehr said Canadian banks are taking the prudent step of reorganizing their businesses, as the sector prepares for lower profitability.
"I think we're moving into the next phase of the economic cycle â€” particularly domestically â€” where Canadian consumers will probably demand less of personal loans and certainly mortgages," he said.
"So the bread and butter source of profitability for Canadian banks is perhaps losing some of its momentum, so they're perhaps looking for different avenues for growth and employ capital to different areas going forward."
The banks may also be reorganizing ahead of the likely possibility of higher interest rates coming from the Bank of Canada sometime in 2015. The central bank's key short-term interest rate has been at one per cent since September 2010. As a result, it has been relatively inexpensive for bank customers to borrower for major purchases such as real estate and vehicles.
"We're seeing all bank management take a look at their businesses. For the last several years, they learned how to operate in this low interest rate environment," said Fehr. "I now think it's a prudent move on behalf of the banks to try and identify how and where they can position their businesses in an environment where rates ultimately start to rise."
Bank analyst Meny Grauman said it's not a "boon time" for wealth or retail banking in the Caribbean, but he doesn't think Canadian banks will pull out of the region completely.
"It's definitely not as lucrative as it was years ago, the economic situation is continuing to deteriorate there," said Grauman, who works for Cormark Securities.
"(But) I don't think any one of them is going to totally divorce themselves from the region."
He also added that RBC's decision doesn't necessarily mean it's slimming down it's overall wealth management division, but rather moving those investments elsewhere.
Like several other major Canadian banks, RBC is also undergoing a change in upper management after the retirement of its long-time chief executive. RBC's newly appointed CEO, Dave McKay, took over in August from Gord Nixon. Scotiabank's CEO Brian Porter took over the top job from Rick Waugh last November. CIBC's Victor Dodig became CEO in September and TD's Bharat Masrani officially became the bank's chief executive on Nov. 1.
RBC's pullout from the Caribbean international wealth management business follows this year's sale of its Jamaican banking division, at a loss. Despite that, the bank had a profit of nearly $2.4 billion in the quarter ended July 31, including a record $285 million at wealth management, up 22 per cent from a year earlier.
The bank's fourth-quarter and fiscal 2014 annual results will be issued Dec. 3. As of the end of July, it's nine-month profit was $6.67 billion, including $100 million in losses related to the sale of RBC Jamaica and $32 million for post-employment benefits and restructuring in the Caribbean between Nov. 1 and July 31.
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Note to readers: This is a corrected story: Headlines in a previous version said the bank was pulling out of the Caribbean
DETROIT - Toyota is recalling nearly 423,000 Lexus luxury brand cars in the U.S. to fix fuel leaks that can cause fires.
The recalls affect the 2006 to 2011 GS, 2007 to 2010 LS and the 2006 to 2011 IS models.
Toyota says that the cars' fuel lines have nickel phosphate plating to protect against corrosion. Some lines could have been built with particles coming in contact with a gasket. That can cause the sealing property to deteriorate and trigger fuel leaks.
Toyota says it's not aware of any fires or injuries caused by the problem.
The company first began looking into the matter in June of 2010 after getting a report of gasoline odour coming from a customer's engine compartment, according to documents posted Friday by the National Highway Traffic Safety Administration. Toyota investigated, but didn't find the cause until this year, the documents said. It decided to do the recall in October.
The company and dealers received six reports from the field and 238 warranty claims about the problem.
Dealers will repair the gasket seating surface at no cost to owners.
Some of the Lexuses were recalled in 2009 to fix leaks in aluminum fuel pipes.
WASHINGTON - Unemployment rates fell in 34 U.S. states in October, a sign that steady hiring this year has been broadly dispersed through most of the country.
The Labor Department said Friday that unemployment rates rose in just 5 states, the fewest since April. Rates were unchanged in 11 states.
Steady economic growth has prompted more companies to add jobs, though the additional hiring hasn't yet boosted wages. Nationwide, employers added 214,000 jobs in October, the ninth straight month of gains above 200,000. That's the longest such stretch since 1995. The U.S. unemployment rate stood at 5.8 per cent, a six-year low.
Georgia had the highest unemployment rate in October, at 7.7 per cent, though that was down from 7.9 per cent in September. North Dakota continued to have the lowest rate, at 2.8 per cent.
Employers added jobs in 38 states and cut them in 12. The biggest gains occurred in California, which added 41,500; Texas, which gained 35,200; and Florida, which added 34,400.
Nevada reported the largest job loss, a decline of 7,300, followed by New York, where employers cut 5,600, and New Jersey, which lost 4,500.
On a regional basis, the Midwest reported the lowest unemployment rate, at 5.6 per cent, followed by the Northeast at 5.9 per cent. Unemployment in the South was 6 per cent last month, and in the West, 6.5 per cent.
Recent data suggests hiring nationwide should remain healthy in the coming months. The number of people seeking unemployment benefits slipped last week and remains not far from 14-year lows. That suggests few companies are laying off workers and are likely confident enough in the economy to keep adding jobs.
A survey by the Federal Reserve Bank of Philadelphia this month found that a majority of manufacturers in the region plan to add jobs over the next 12 months.
NEW YORK, N.Y. - Dow Chemical Co. has agreed to add four new members to its board of directors after pressure from hedge fund activist Daniel Loeb's Third Point.
Shares of the specialty chemicals maker rose almost 3 per cent in morning trading Friday.
Three of the new additions will join the board in January. They are former IBM chief financial officer Mark Loughridge, former Foster Wheeler CEO Raymond Milchovich and former Hawker Beechcraft CEO Robert Miller. U.S. Bancorp CEO Richard Davis will join in May.
Midland, Michigan-based Dow has also agreed to include the group in its nominees for election at the 2015 annual meeting.
In January, Third Point disclosed that it bought a stake in Dow, calling it its biggest investment. Third Point currently has a 1.9 per cent stake in the company.
As recently as last week, Third Point published a website and video pushing Dow to shake up its board and increase shareholder value. In February, Dow rejected a push by Third Point to spin-off its petrochemicals division.
As part of the agreement announced Friday, Third Point has agreed it would not publicly criticize Dow or push for any changes in the board for a year.
Dow Chemical shares rose $1.49, or 2.9 per cent, to $52.97 in morning trading Friday. Its shares are up more than a third since a year ago.
NEW YORK, N.Y. - Online streaming service Aereo says that it has filed for Chapter 11 bankruptcy protection, saying an unfavourable ruling by the U.S. Supreme Court was too difficult to overcome.
The Internet startup â€” which is backed by Barry Diller â€” made waves earlier this year by letting people record and stream broadcast TV online. At the time, it was seen as an alternative to cable, offering a few dozen local broadcast channels and the Bloomberg TV financial channel on multiple devices for just $8 a month.
Hulu offers full episodes of popular shows from broadcast networks ABC, NBC and Fox the next day for free. But Aereo offered live streaming of those TV channels.
In June, the Supreme Court ruled that Aereo operates like a cable TV company. As a result, the court said the service violates copyright law unless Aereo pays broadcasters licensing fees for offering TV station programs to customers' tablets, phones and other gadgets.
Three days after the court ruling, Aereo announced that it was temporarily closing down its operation.
CEO Chet Kanojia said in a statement Friday on the company's website that the Supreme Court decision "effectively changed the laws that had governed Aereo's technology, creating regulatory and legal uncertainty."
Kanojia said that the Chapter 11 filing will allow Aereo Inc. to maximize the value of its business while avoiding the cost and distraction of litigation.
Aereo also named Lawton Bloom as its chief restructuring officer.
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