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Scotiabank raised dividends by three cents to 90 cents per share and saw two per cent overall profit growth, driven by a $262-million rise in international banking profit from 2018. BMO reported one per cent profit growth, did not adjust its dividend rate and put aside $306 million for credit losses, up from $186 million in 2018. (The Logic)

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Talking point: Scotiabank has the biggest overseas presence of the big six banks, and has recently focused on international expansion in four Latin American countries—Mexico, Chile, Colombia and Peru—including a $2.9-billion majority stake purchase of Banco Bilbao Vizcaya Argentaria in Chile, and a $130-million controlling stake acquisition in the Banco Cencosud in Peru. This focus seems to have paid off—international banking earnings are up 90 per cent from a year ago. Meanwhile, the bank is selling operations in nine Caribbean countries, and is engaged in a standoff with the prime minister of Antigua and Barbuda over the sale in the country. Meanwhile, BMO has focused on the U.S. for international growth: earnings in this division saw 1.1 per cent growth—that’s the slowest since the fourth quarter of 2017, and is largely driven by increased loan loss provisions. BMO CEO Darryl White also cited escalating trade tensions as a factor in the tepid results.

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Louis Vachon, the bank’s CEO, said it can’t find enough projects in Canada to meet its lending targets in renewable energy. Instead, the bank is financing projects in U.S. and Europe, Vachon said at the bank’s annual meeting. It has no plans to reduce lending to the oil and gas sector. (Globe and Mail)

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Talking point: The National Bank has had mixed results in financing green initiatives, which could help explain its conversatism on the file. It expects to lose money on a $10 million loan owed by Téo Taxi, a Montreal-based electric vehicle company that went bankrupt in 2018, after the company fumbled the development and roll-out of its core technology (the bank’s chances of getting their loan back could change if Pierre Karl Péladeau if successful in reviving Téo). “We have to lend based on the technology that is there,” Vachon told shareholders at the meeting. However, the bank may feel more pressure to make bold decisions on green financing  in the coming months and years, as investors and governments increasingly urge lenders banks to disclose, and grow, their sustainable financing.

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David Rozon, associate vice-president of technology banking for Ontario, is going to Scotiabank. Brent Layton, a managing director whose remit includes technology and sustainability banking, will join CIBC. (Globe and Mail)

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Talking point: National Bank’s technology division has lost a number of top employees in recent months as rivals are showing a greater interest in the tech sector. National Bank is still a key player when it comes to tech financing: the company co-led an equity raise by Shopify in 2019 and was a lead underwriter for Lightspeed’s IPO earlier this year. Competition in the space is heating up with BMO and CIBC in particular looking to sign more deals with tech companies. In August 2018, CIBC poached Eric Laflamme from National Bank to lead the Quebec region of its innovation banking division. The banks’ increasing interest in startup financing is bringing them head to head with Silicon Valley Bank, which got a license to operate in Canada in March. Earlier this month, CIBC got a US$55-million credit facility for Lightspeed, taking over a US$15-million credit facility that Silicon Valley Bank had been providing.

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Canada’s sixth-largest bank had $552 million in profit this year compared to $550 million in 2017. Earnings at its financial markets arm declined 17 per cent.  Meanwhile, Laurentian Bank will cut 10 per cent of its staff after profits dropped 33 per cent to $40.3 million in its first quarter. (Globe and Mail)

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Talking point: While the earnings of the big banks have been boosted by their presence in international markets—BMO and Scotiabank both reported growth overseas yesterday—the smaller financial institutions have been hurt by uncertain financial and capital markets.

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The funding will be used to build fraud-detection and speech-to-text analytics tools in the school’s computer science department. (The Logic)

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Talking point: This investment gives Scotiabank access to Edmonton’s growing AI talent pool at a time when competition in Canada’s other two major cities for AI research—Toronto and Montreal—is reaching a fever pitch. The University of Toronto, McGill University and the Université de Montréal have announced partnerships with some of the largest companies in the world, including Uber, Facebook and Samsung. Scotiabank has been an early mover in AI company-university partnerships before. It made a $1.75-million donation to U of T in September 2016, well before those Big Tech companies signed their deals. RBC and Mitsubishi have research facilities in Edmonton and Google’s DeepMind chose Edmonton for its first-ever international AI research facility.

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One of the world’s biggest lenders, the EIB has committed to end its multibillion-euro lending to fossil-fuel energy projects, including natural gas, by 2022 and align all financing decisions with the Paris Agreement—a move that it claims makes it the planet’s first “climate bank.” The new policy, which the bank called a “quantum leap,” will unlock €1 trillion in financing for climate action and sustainable investment in the next decade. (Forbes, The Guardian)

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Talking point: This was a major policy promise of incoming EU Commission President Ursula von der Leyen, whose first act in office was to charge her second-in-command with executing a European Green Deal and achieving climate neutrality by mid-century. Since 2013—when the bank stopped backing coal projects—the EIB has provided €13.4 billion in financing to fossil-fuel ventures, about €2 billion just last year. The new policy will only see the bank lend to projects that produce less than 250 grams of carbon dioxide per kilowatt hour. Gas-based enterprises would qualify if their plans include “increasing shares of low-carbon gas over the economic lifetime of the project.”

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The plan commits the bank to “robust” climate-related governance and reporting. It says it will integrate climate risk assessments more in lending, financing and investing, decarbonize its operations and create a “Climate Change Centre of Excellence.” (The Logic)

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Talking point: The pressure to shift toward sustainable financing has increased since May, when the Bank of Canada first listed climate change as one of six vulnerabilities in the Canadian financial system. The central bank recognized that investors are not seeing prices that factor increasingly serious climate risks (due to a lack of transparency around carbon exposure), which could lead to “fire sales” that may destabilize the economy. Scotiabank, which manages more than $1 trillion in assets, issued its first green bond in July at US$500 million that invested in renewable energy, clean transportation and green buildings.

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Glen Gowland, executive vice-president of global wealth management, said the bank is looking to build an investment-handling division in the U.S., or buy an existing firm, to bring more assets under management and attract ultra-high-net-worth clients. (Bloomberg)

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Talking point: Scotiabank has used such acquisitions to grow its Canadian wealth management client base, like the institutional investors and high-net-worth families brought in via the $950-million deal for Jarislowsky Fraser in February 2018 and the $2.6 billion acquisition of doctor-serving MD Financial in May 2018. Other Canadian financial institutions like Manulife have also started expanding their services for the super-wealthy. Wealth management brought in 12 per cent of Scotiabank’s earnings in each of the last two fiscal years, and it wants to raise that to 15 per cent. Gowland expects that part of its business to grow faster outside Canada, in markets like Chile, Peru, Columbia and Mexico. A big buy in the U.S.—a country with a large ultra-wealthy class—would help.

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The Los Angeles-based dog-walking startup is reportedly discussing a sale for less than US$300 million. That’s less than half of its initial valuation of about US$650 million. (Bloomberg)

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Talking point: The investment conglomerate put US$300 million into Wag via its Vision Fund in January 2018, in exchange for 45 per cent of the company. That investment was meant to fuel international growth, but Wag struggled to maintain its U.S. market share compared to competitor Rover, whose second-quarter revenue grew 24 per cent, against Wag’s 12 per cent loss. It also floundered in its expansion efforts within the country, due in part to a series of customer service complaints, including lost and injured dogs. The company’s growing pains come as another blow to SoftBank’s ongoing effort to garner support for Vision Fund 2. The fund, which founder Masayoshi Son has said will focus on less risky investments than the original, has struggled to attract major investors thanks to fallout from struggling Vision Fund investments like WeWork and Uber.