ken..."Canada's banks are in the best condition of any country in the world. Not one government penny has been given to any of the 21 banks in Canada."....
No tax payer money to bail out banks yet..but....
Value of Quebec's pension-fund manager falls by nearly $40 billion in 2008
Wed Feb 25,
ca.news.yahoo.com
MONTREAL - The Caisse de depot et placement defiantly warned Quebecers not to panic in the face of a staggering $39.8-billion drop in the value of its assets in 2008.
"I don't think it would be prudent to take early conclusions on a bad year," CEO Fernand Perreault said Wednesday after disclosing the worst annual performance in its 43-year history.
He blamed the performance on the global financial crisis that broke out in the fourth quarter, the devaluation of the Canadian dollar and the Caisse's holdings of asset-backed commercial paper.
"In October 2008, in a matter of days, the world tipped into the worst financial and economic crisis of the past 80 years," he said at a news conference televised live across the province.
Canada's largest pension fund manager said it remains strong and financially able to pounce on investment opportunities that arise even though its assets dropped 25 per cent to $102.1 billion as of Dec. 31.
Thanks to strong gains in previous years, its five-year return was 3.1 per cent, slightly below the 3.6 per cent median of its Canadian peers. Excluding ABCP, the return would have been 4.1 per cent.
About $22 billion of last year's fall are paper losses that could regain value once the markets recover. The rest comes from losses realized on the sale of investments and a $8.9 billion from hedging its foreign real estate and equity holdings.
"These funds are capitalized on a long-term basis...it's not a good thing to panic in a bad year," added Perreault, who stepped in to guide the investment giant last year but will retire after the government names his replacement.
Perreault refused to apologize for the Caisse's weak performance but said no bonuses will be paid out as a result of last year's losses.
He acknowledged the error in investing so heavily in asset-backed commercial paper, which he described as "a difficult page in the Caisse's history."
"In hindsight, we placed too much confidence in these securities.....It was a mistake to accumulate so much ABCP."
The Caisse had 30 per cent of Canada's ABCP and was stung in the fall of 2007 when the market suddenly froze. It took a $4-billion provision in 2008, on top of a $1.9-billion writedown in 2007.
Perreault said the Caisse acted prudently when it scaled back its stock holdings last fall and boosted its investments in fixed income and currencies by nearly 15 per cent.
"We'll be back on the stock market when we feel that it's time to go back," he told reporters. "We'll exercise prudence in doing it, we will not be gun shy."
In Quebec City, Premier Jean Charest called 2008 a "disappointing" year for the pension-fund manager especially compared to its peers.
"And for that reason, we feel that management at the Caisse should have an opportunity to explain (in a legislative committee) how they managed and how they dealt with some of the risks involved in the management of the fund," he said.
Action democratique Leader Mario Dumont called the Caisse's result "a very sad story."
"I would have liked to have been wrong today and that Quebecers would miraculously see all the money in their accounts. But that's not the case," said Dumont, who joked it would make a good subject on his upcoming talk show after he retires from politics.
Ratings agency DBRS said the Caisse's credit profile remains solid even though the poor returns erased nearly 2.5 years of returns.
"While the weak performance will likely take several years to offset, DBRS notes that the Caisse maintains a very strong credit profile buttressed by its exclusive legislated mandate to manage the assets of several public depositors, as well as its substantial liquidity position and large investment portfolio," it stated in a report.
John Stephenson, portfolio manager of First Asset Funds Inc., said the Caisse clearly got burned by going so heavily into ABCP.
"It's unfortunate but they clearly went out there on the risk curve without knowing it and they got their head handed to them - as they should," he said.
The pension fund is one of Canada's largest pools of investment capital and a major investor in real estate, blue chip Canadian companies and well-known Quebec firms like Quebecor Media. |
