Finance Committee on April 2nd, 2008

[Jean-René Halde]

Economic diversification.

[Dean Del Mastro, Conservative, Peterborough, ON]

Yes. Do you work in coordination with those funds? Is there collaboration between you and groups like Community Futures and so forth?

[Jean-René Halde]

Yes, we do.

[Dean Del Mastro, Conservative, Peterborough, ON]

How does that work?

[Jean-René Halde]

We have clients who are referred from one to the other. In some cases we even have formal memoranda of understanding for certain industries, where we'll work together. We have some ability to assess risk that they might not have in some cases, so if they're willing to go an extra mile on risk, maybe even further than we would be, we'll share some of the risk in an attempt to extend our reach to help more entrepreneurs.

It's working relatively well.

[Dean Del Mastro, Conservative, Peterborough, ON]

Thank you very much.

[The Chair, Conservative, Rob Merrifield]

Thank you.

I have a couple of questions. They may not be quite fair. You obviously are a high-risk lender to try to build development in Canada. Where's your threshold? What is your highest rate? There must be a cut-off, because you go in by each individual project. How high would you lend, as a rate, to counter-punch the risk, before you say, “Well, that's too high to go”?

[Jean-René Halde]

I'm not sure I can answer that, because it is on a project-by-project basis. We have loans that are fully unsecured, and that's probably as high a risk as one can take. But if you have a startup loan, in some cases we'll...you know.

[The Chair, Conservative, Rob Merrifield]

I knew it was a little bit unfair to ask that, but the reason I asked it is that when you assess the risk, it must be more than just the risk you see in the Canadian market; it must also take into effect the global market, particularly the United States and the slowdown.

This next question might be unfair. It's a subjective question, but I wanted your position or your thinking on it. Is the slowdown in the United States going to be deep and long, or shallow and short?

[Jean-René Halde]

I wish I could answer that question. There are much better minds than mine that would love to know the answer to that one.

[The Chair, Conservative, Rob Merrifield]

You must be making your assessment based on your best guess.

[Jean-René Halde]

It's such a large question mark. When we review a project, there are so many factors. It starts with the quality of the management team and it goes to the quality of the product, the quality of the service. The uncertainty in the U.S. is one of many factors we look at, but I can't say that we have a crystal ball--I wish we did, but we don't.

[The Chair, Conservative, Rob Merrifield]

I know it's just a crystal ball, and we wouldn't hold you to it if you made a stab at that question, but I also believe that you have an idea of what the risk would be there. You must have to assess that in each case, and that would factor into it. But if you don't want to answer it, that's—

[Jean-René Halde]

No, I wish I could. We are concerned, as is everyone else, with a potential downturn. What surprises us is how well our portfolio is still holding up. As I said earlier in the presentation, our delinquency rates are holding steady. Our impaired loans are holding steady. So there's a bit of a surprise, quite honestly, even among bankers who are much older than I am, about how steady we are. So the bottom line is I don't know.

John, you've been in the business a long time.

[John MacNaughton]

Yes. A supplement is that our president is speaking about how they assess the risk of individual loans. Of course the risk is mitigated through diversification, so that becomes a factor in the overall risk of the portfolio. This is a highly diversified portfolio by industry sector, by company, by geography, and by stage of development. So there's a mitigation of risk that flows from that diversification.

[The Chair, Conservative, Rob Merrifield]

I want to thank you very much for coming in. I appreciate it. I appreciate the questions and the dialogue.

We'll now take a two-minute suspension as we carry on with the business of the committee. Thank you.

[The Chair, Conservative, Rob Merrifield]

I call the meeting back to order. If members will take their seats, we'll carry on.

We have a notice of motion by Mr. McCallum, and I believe he would like to move that motion, so we'll yield him the floor to do so.

[John McCallum, Liberal, Markham—Unionville, ON]

The motion is as it reads, but a critical element is that I'm proposing that we adopt this motion, and that we hear representatives from the retail investors on April 9, one week from today.

[The Chair, Conservative, Rob Merrifield]

Okay, we have a motion on the floor, but the dates of that are not part of your motion. That's just what you're suggesting. Is that what you're saying?

[John McCallum, Liberal, Markham—Unionville, ON]

If we could agree today, assuming the motion passes, I would like us to hear those investors one week from today.

[The Chair, Conservative, Rob Merrifield]

I'm not going to speak to the motion, but as the chair I'll speak to the timing, because we do have a significant number of people, because of our study, who have actually been asked to come, and who have been scheduled in on those dates. So that's my problem as the chair, and I would not wish to compromise what we've already scheduled on those dates.

[John McCallum, Liberal, Markham—Unionville, ON]

Then perhaps we could have a supplementary meeting. I think it's very important. The retail investors have been asking for meetings for a long time. They're very time-sensitive, so perhaps if we can't do April 9, we can do April 8. But I would like it if it could be next week.

[The Chair, Conservative, Rob Merrifield]

Supplementary meetings are something the committee can decide on, but I would not want to be bumping off for April 9 the agenda of the meetings that we—

[John McCallum, Liberal, Markham—Unionville, ON]

What are the meetings?

[The Chair, Conservative, Rob Merrifield]

The witnesses are already coming, and we're paying them to come. So let's not get bogged down on the timing. Let's talk about the motion. Would that be fine?