Fisheries Committee on June 11th, 2009

[The Chair, Conservative, Rodney Weston]

Thank you very much.

We'll go to Mr. Van Kesteren.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Thank you, Mr. Chair.

Thank you, Madame Métivier, for appearing before us. We were very pleased and happy to see you before the industry committee. You provided us with much-needed information, and you're doing that again this morning.

Could you tell me--I haven't heard the reason yet--why the Icelandic banks failed?

[Edmée Métivier]

I don't have all the reasons. It's actually a very good question, and I may not have a satisfactory answer for you today. What I suggest is that I get back to you or the committee later on.

I think that at one point they could not raise capital to continue to do what they were doing, or the cost of doing their business became overwhelming. So it was a combination of bad debt and an inability to continue to raise capital that caused them to fail. That has created quite a lot of disruption in the marketplace in Canada, particularly in Atlantic Canada, because they were heavily invested in Atlantic Canada.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

You testified earlier that you were a lender of last resort and that the act restricts your involvement and the degree to which you can conduct business. Has the government relaxed some of those rules? I understand, of course, that they have to work within the confines of the law. But have they given you a little bit of flexibility?

[Edmée Métivier]

We have not been a lender of last resort since 1995, simply because it wasn't a viable bank, basically. If you truly want to be a development bank in Canada and help the companies that have the potential to be competitive and succeed, you have to focus on the ones that are well managed and that have a viable business model. That's where you have to focus your attention.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

I'm sorry, I said last resort. I should have said the ones that have fallen through the cracks.

[Edmée Métivier]

Yes, the ones that are falling through.

There are two things happening in the marketplace at the moment. When you go through a recession, the weakest point will be the one that will fail. One has to ask the question of which one you want to invest in, the stronger one that will come out of the recession and help the recovery of the country, or the weakest one where you're only going to delay the end result.

That's what BDC tries to do. BDC has sufficient power to be able to exercise its mandate. But banking is an art; it's not a science. It is the art of sitting down with an entrepreneur and looking at all the elements--the marketplace in which they are, the way they have structured and organized their business, their financial strength or not, and the entrepreneur behind it and what the entrepreneur has vested into that business. All of that helps the banker to make a decision.

In the situation at the moment, I would say there are places where, if the government wants to have an intervention and help support companies that are perhaps on the verge of failing.... It's a different approach from that of a development bank; it's grants and subsidies, whereas BDC's role is to stretch itself, which we will, and we are. We took substantial provision for losses last year and we will take substantial provision for losses this year. Having said this, it has to be temporary, and at the end of the day we have to have the sense that the business we're supporting is going to succeed, even if it's high risk.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

I want to split my time with my colleagues. I have one last question. You might not have this right at your fingertips, but maybe you can provide this for us.

In relation to the GDP and what that represents in Atlantic Canada, what is the proportion of funds? We want to make sure there is fairness across the board. Is that something you can provide this committee with? What amount of money has been loaned through BDC?

[Edmée Métivier]

I can actually give you an appreciation of what we have in portfolio. We have a portfolio of about $11 billion. I'm just going to give you a rough estimate, but you can see how it's spread across Canada. The western provinces have $3 billion, Ontario has $3 billion, Quebec has $3 billion, and a little over $1 billion is in the Atlantic provinces--it's actually $1.3 billion. That's how our activities are spread across Canada.

In terms of the proportion to GDP, I don't have the data. We could come back to the committee, if you wish.

[Dave Van Kesteren, Conservative, Chatham-Kent—Essex, ON]

Thank you.

[Edmée Métivier]

You're welcome.

[John Weston, Conservative, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Mrs. Métivier, I believe we are all impressed by your understanding of the issues and by your preparation. We thank you.

I have three questions. I am beginning to understand how the management of BDC works for the first time. Could you send us a copy of today's presentation?

[Edmée Métivier]

Absolutely. I would be pleased to.

[John Weston, Conservative, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

Thank you.

Furthermore, I feel—and this is not necessarily the committee's opinion—that one of the biggest problems in this industry is the marketing. Could the BDC possibly do more marketing, in order to inform fishermen and businesses that—

[Edmée Métivier]

That we exist.

[John Weston, Conservative, West Vancouver—Sunshine Coast—Sea to Sky Country, BC]

That's it. Is more needed?

Thirdly, our role is to provide advice to the minister and to the House of Commons. What should we do, in your opinion?

Maybe we'll miss it, unless you tell us.

[Edmée Métivier]

Do you mind if I answer in English? It's easier for me. Banking terms are all in English, unfortunately.

Let's talk about marketing. You are right, BDC is perhaps not as well known as it should be, simply because of our size. If you compare BDC to the size of the financial institutions that were here an hour ago, it's very different. As I said, we have 100 branches; they have 6,000. We can do some publicity, but that's not going to solve it all by itself.

BCAP, in my view, is going to help us much more, because it is forcing financial institutions before they decline a loan, if they feel it is a creditworthy company, to refer the business to BDC. That's helpful. Having relationships with the financial institutions, with other crown corporations, with all of you here in this room, is what we need, so you need to talk about BDC and its role.

We invest every year in marketing and we try to do it across Canada. Having said that, the main goal of BDC and why we're able to sustain ourselves is to give it back to entrepreneurs. The main goal of BDC is to provide financing, consulting and so forth, not necessarily to only do marketing. We try to balance the two.

BDC is starting to be much more known during this recession than before, so that is a good thing for us. It's an opportunity for us at the moment, that we are grasping with all our passion.

Your third question is one that requires a little bit of reflection, because you're basically asking what is in the best interest of the industry. That's what you are asking. What is in the best interest of the industry may not be in the best interest of every player, hence the difficulty we are facing today.

In good times it's easy to get into business. It's easy to start a business and it's easy to make money--or not, but when things are going well, there's lots of money in the marketplace. In a recession, we are going into a contraction. Offers exceed demand today. That is the issue. Therefore, it is going to be painful, and some form of rationalization will have to occur. The difficulty is there, and I think the minister understands this. I had a chance to sit down with her about 30 or 45 days ago, actually, and we had a discussion around that, and I believe she understands this deeply.

[An hon. member]

Thank you.

[Edmée Métivier]

You're very welcome.

[The Chair, Conservative, Rodney Weston]

Thank you very much, Ms. Métivier. We really appreciate your coming in today and taking time out of your very busy schedule to meet with the committee and answer our questions.

Thank you very much.

[Edmée Métivier]

It was my pleasure. Thank you very much.

[The Chair, Conservative, Rodney Weston]

Thank you.

The meeting is adjourned.