Gladly.
Evidence of meeting #32 for Finance in the 39th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was risk.
A recording is available from Parliament.
Evidence of meeting #32 for Finance in the 39th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was risk.
A recording is available from Parliament.
4:10 p.m.
President and Chief Executive Officer, Business Development Bank of Canada
Gladly.
4:10 p.m.
Bloc
Jean-Yves Laforest Bloc Saint-Maurice—Champlain, QC
In the next paragraph, you say the following:
This involves adoption of a combination of strategies that focus on R and D and innovation, supply, production, and marketing and sales.
So you are able to help companies like that properly. Do you not help those who are not in this area?
4:10 p.m.
President and Chief Executive Officer, Business Development Bank of Canada
We help all kinds of companies. Currently, those in the manufacturing sector are in particular difficulty in some respects. We sit down with them regularly to explain that they have choices to make: they can become very good and efficient in production; they can outsource it in whole or in part; they can buy components overseas or they can become very good at marketing. We help them to take a strategic position in this global game of chess, which is not easy to understand.
4:10 p.m.
Bloc
Jean-Yves Laforest Bloc Saint-Maurice—Champlain, QC
So they are told that they are ready to deal with globalization to a greater or lesser extent, and they have to get ready and to invest in certain areas. In that context, what is the difference between the Business Development Bank and a chartered bank?
4:10 p.m.
President and Chief Executive Officer, Business Development Bank of Canada
We are a development bank. When we meet with new employees, I always tell them that, if they think they are working for a bank, they are in the wrong place. I make sure that they know that we are a development bank first and foremost. We see our role as much wider. In fact, that is part of our mandate.
The act that created our organization in 1995 stipulates that our role is to support entrepreneurship, not just to conduct financial transactions. The goal is to help the entrepreneur. We examine his activities and we try to develop the best possible services, whether that be through consulting services, by tailoring our financing, by coming up with innovative forms of financing, and so on.
4:10 p.m.
Bloc
Jean-Yves Laforest Bloc Saint-Maurice—Champlain, QC
The banks do the same thing, but for money.
Thank you.
4:10 p.m.
Conservative
April 2nd, 2008 / 4:15 p.m.
Conservative
Rick Dykstra Conservative St. Catharines, ON
Thank you. Mr. Chair.
One of the interesting questions I have probably doesn't speak to the content of the material you've provided—and I certainly appreciate that. It's actually found on page v of the corporate plan summary, in the conclusion. It's the very first sentence under the subheading “Conclusion”. It made me smile a little bit, because I assume that the corporate plan summary was written by the bank itself. Right?
4:15 p.m.
Chair of the Board of Directors, Business Development Bank of Canada
It was.
4:15 p.m.
Conservative
Rick Dykstra Conservative St. Catharines, ON
When I read the conclusion, the first sentence says “BDC’s performance to date has been excellent.” Have you ever, as an organization, actually given yourself a mark other than excellent? Have you ever determined that a year has not gone very well at all and you've made that pointedly obvious in your corporate plan and have made some recommendations as to how that would change?
4:15 p.m.
President and Chief Executive Officer, Business Development Bank of Canada
It's an interesting question. I've only been with the bank for three years, so I can't go back more than that.
First, let me assure you that we have a board of directors that keeps us quite honest, and they're doing a great job at it. We're never fully satisfied, because there's always more you could do—just following the last question. We're a development bank, so what else could we be doing? We're planning our strategic retreat for the fall, and the question we have on the table is, is there anything else we could do to help out?
So are we doing as much as we could? The answer is probably no, because there's probably something better that we could be doing, but that said, we like to think we're capable at what we do. I think we price for risk well. We take the kinds of transactions and risks that others will not take. In venture capital, we go where others don't want to go, which is at the very early stage of venture capital. We provide very affordable consulting. So I think SMEs are well served by the presence of BDC.
4:15 p.m.
Chair of the Board of Directors, Business Development Bank of Canada
The board of directors approves the business plan before it's submitted, and I would say that it's a group of people who, if they thought that the bank had underperformed during a year, would not be reluctant to so state in the written summary.
4:15 p.m.
Conservative
Rick Dykstra Conservative St. Catharines, ON
I appreciate that. I do say it with a bit of a smile on my face, because I can't think of a report I'd write about any organization that I was involved in that you wouldn't want to say it is excellent.
4:15 p.m.
President and Chief Executive Officer, Business Development Bank of Canada
Having said that, though, this is submitted to the minister for approval, and if the minister or the ministry disagreed with the content, I am sure we'd hear.
4:15 p.m.
Conservative
Rick Dykstra Conservative St. Catharines, ON
The next question I had focuses a little more on the current state of manufacturing. We certainly have held a number of hearings here at this committee to talk about those exact issues, whether they be manufacturing, whether they be forestry.
I had the opportunity to meet with a number of manufacturers in my community in St. Catharines and Niagara. I hosted a forum with them, and as well met with a number of the banks and credit unions in Niagara, obviously to get a feel for where they were at in terms of next steps and what they could possibly be doing.
Could you comment briefly on how you've been able to help the current manufacturing sector through some of these issues? Do you have any advice or recommendations that you could pass on to the committee with respect to that sector?
4:15 p.m.
President and Chief Executive Officer, Business Development Bank of Canada
There are a number of ways where I think we've been helpful. Clearly one way is on the consulting side, where I think we provide excellent quality service at very affordable rates. The average mandate is about $10,000, so these are not the fees that would be charged, obviously, by large private sector consulting firms.
Secondly, we will finance people in organizations that we believe in, even if they're having some difficulties. If we believe, as I said earlier, that the business plan makes sense and if we believe that the management team is capable, we have an internal program called “Manufacturing Plus”, where we'll go the extra mile to support those people as they're restructuring.
Thirdly, we had our postponement campaign on capital. Clearly some of them were happy to have a six-month reprieve on capital repayment. That was very useful to them.
I'm sure there are others, but those are the three that come to mind very quickly.
4:15 p.m.
Conservative
Rick Dykstra Conservative St. Catharines, ON
You brought this out in one of the questions that I had. One of the aspects that you've added in terms of key services is the consulting. I wonder whether you could comment on whether or not you feel there are times when you're in a conflict with the private sector in terms of providing the service, and whether you get the response from the private sector saying that government or an agency of government seems to be getting itself involved in a business the private sector is already in, and it's potentially hurting them.
4:15 p.m.
President and Chief Executive Officer, Business Development Bank of Canada
The answer to that one is very simple: the service is provided by private sector consultants. What we do is we provide the diagnostic.
If one of our account managers goes into a business and identifies that there might be a problem, let's say, of productivity, he will bring along a colleague from BDC who will assess the problem at hand and recommend to the private sector entrepreneur a consultant from the private sector. Now, we have a roster of about 400 consultants across Canada who we believe are capable. They tend to be usually either very small firms or capable individuals who will do the work for a reasonable price. We tend to certify the methodology so that at least there's relatively consistent service across all of Canada, but because we're complementary, the purpose was not for us to provide the service but basically to have the service provided by private sector consultants.
4:20 p.m.
Liberal
John McKay Liberal Scarborough—Guildwood, ON
In responding to one of Mr. Del Mastro's questions, you said the Government of Canada had taken over the debt of BDC. Did I hear that correctly?
4:20 p.m.
President and Chief Executive Officer, Business Development Bank of Canada
No, that's not correct.
In the past we borrowed on international markets and in Canada. Our borrowing level is about $8 billion. What the government has done is provided us with the ability to borrow basically from the consolidated revenue fund directly, versus--
4:20 p.m.
Liberal
John McKay Liberal Scarborough—Guildwood, ON
So you in effect get the Government of Canada credit rating.
4:20 p.m.
President and Chief Executive Officer, Business Development Bank of Canada
Yes, but we had it before, because when we would borrow in international markets we would have the guarantee of the government. Now it's just a lot simpler: we go directly to Ottawa and we borrow in Ottawa, effective now, literally.
4:20 p.m.
Liberal
