Hoping to shore up its two structured investment vehicles (SIVs) as it continues to liquidate the assets in those vehicles, BMO Capital Markets said it would provide liquidity support for the repayment of senior notes that secure the Links Finance and Parkland Finance programs.
The bank has been trying to sell the assets in Links and Parkland since last summer, when an erosion of investor confidence disrupted the asset-backed commercial paper (ABCP) and SIV markets. Since last July, the assets in Links have been reduced to $12.3 billion, from $23.4 billion; Parkland saw its holdings drop to 1.2 billion ($1.7 billion) from 3.4 billion. The liquidity facilities will be capped at about $11 billion for Links and 1.2 billion for Parkland.
"Given the terms and conditions of the proposed liquidity facilities and the maturity profile of the senior notes, the amount to be drawn is expected to be about half the amount of the maximum amount of the facilities," the bank said.
The announcement came from BMO Financial Group, which said it expects to take about $490 million in pre-tax charges when it releases first-quarter earnings results in early March. The company said it expects the changes to lower earnings per share by about 70 cents.
BMO said it was also planning to restructure its corporate CDO, Apex/Sitka Trust. Although the ratings on the underlying assets in that vehicle are under review, they still had a triple-A rating at press time.
The bank also made key changes in its management lineup, in connection with its succession plans. Thomas E. Flynn was appointed chief risk officer for BMO Financial Group. He has served as interim chief financial officer since October 2007.
BMO Financial said it recruited Russel C. Robertson as interim chief financial officer from Deloitte and Touche LLP in Toronto, where he was vice chairman since 2002.
Thomas V. Milroy was appointed CEO of BMO Capital Markets. He was co-president of BMO Capital Markets for the past two years. Milroy succeeds Yvan Bourdeau, who will become vice chair of BMO Capital Markets. In his new role, Bourdeau will focus on the execution of the bank's objectives in China and other international markets.
The executive changes will take effect on March 5.
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