$75 million settlement as part of ABCP industry-wide agreement
National Bank Financial Group announced that its securities dealer subsidiary, National Bank Financial, has agreed to a settlement of $75 million with the Autorité des marchés financiers. This agreement is one of a series of agreements concluded between securities regulators and financial institutions involved in Third Party asset-backed commercial paper (ABCP). The settlement amount will be included as a charge applied to the Bank’s first quarter financial results for the current fiscal year ending January 31, 2010.
The settlement recognizes the concerns expressed by the securities regulators regarding certain compliance matters and saves the Bank the cost and time of a full administrative hearing process.
An administrative penalty of $70 million, plus $1 million in investigation costs, will be paid to the Autorité des marchés financiers du Québec. As part of its communication programs, the Bank has also agreed to invest $4 million in a financial education campaign for the benefit of public investors. This program is a complement to the AMF’s own efforts at investor education.
The agreement acknowledges several contributions made by the Bank in response to the Third Party ABCP market freeze in August 2007:
Promptly following the market shut down the Bank voluntarily repurchased 2.1 billion dollars of ABCP held by its individual retail clients and certain money market mutual funds – being the full face value of their Third Party ABCP holdings.
The Bank participated actively in establishing the Montreal Proposal and then the Pan-Canadian Investors Committee for Third Party Structured ABCP (the Crawford Committee) for the restructuring of ABCP.
As part of the restructuring plan, the Bank provided $911 million of margin funding facilities to make the restructuring financially viable.
Following the creation of the restructuring plan, the Bank also extended aggregate credit lines of more than $800 million to its commercial and corporate clients holding Third Party ABCP.
The Third Party ABCP experience was challenging for the entire market place. National Bank Financial Group’s actions reflect its commitment to work constructively with regulatory authorities and its clients.
About National Bank of Canada
National Bank of Canada, which is celebrating its 150th anniversary in 2009, is an integrated group which provides comprehensive financial services to consumers, small and medium-sized enterprises and large corporations in its core market, while offering specialized services to its clients elsewhere in the world. National Bank offers a full array of banking services, including retail, corporate and investment banking. It is an active player on international capital markets and, through its subsidiaries, is involved in securities brokerage, insurance and wealth management as well as mutual fund and retirement plan management. National Bank has more than $132 billion in assets and, together with its subsidiaries, employs 17,747 people. The Bank’s securities are listed on the Toronto Stock Exchange (NA:TSX). For more information, visit the Bank’s website at www.nbc.ca.
Information (The telephone number provided below is for the exclusive use of journalists and other media representatives.):
Senior Advisor, Public Relations
National Bank Financial Group