Evidence of meeting #35 for Finance in the 40th Parliament, 2nd Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was edc.
A recording is available from Parliament.
10 a.m.
Conservative
Daryl Kramp Conservative Prince Edward—Hastings, ON
Mr. Poloz, what is your minimum threshold for credit availability? Obviously you're not going to deal with someone coming in who wants $2,000 for an aluminum boat. What is your threshold?
10 a.m.
Senior Vice-President, Financing Products Group, International Trade, Export Development Canada
That's an interesting question. We don't have a threshold under our export guarantee program for small companies. Their bank does the loan, and the bank has a channel by which they ask for a guarantee. It's 50% or 75%, depending on the situation. The amount is not really a question for us.
10 a.m.
Conservative
Daryl Kramp Conservative Prince Edward—Hastings, ON
I'm not as familiar as I might be with the relationship between BDC and EDC. How much complementary interaction on direct files or cases is there between the two lending institutions?
10 a.m.
President and Chief Executive Officer, Business Development Bank of Canada
There's an increasing amount of cooperation, particularly in this difficult period. Today as we speak, there's a joint effort with clients to work together and help them think about growing their businesses, globalizing, and so on. The referrals back and forth are good. Generally we work quite well together.
10 a.m.
Conservative
The Chair Conservative James Rajotte
Thank you, Mr. Kramp.
We'll go to Mr. Pacetti, please, for five minutes.
10 a.m.
Liberal
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
Thank you, Mr. Chairman.
And thank you to both of you for appearing. It's always interesting.
I'd like to begin with you, Mr. Halde. Thank you very much for your intervention in the case I asked you about. Again, it was good dealing with you and your officials or employees—whatever you want to call them. I think we solved the problem, and we'll see for how long.
I just have a couple of questions. In your brief you state that the Canadian secured credit facility is up and running and has allocated close to $11 billion to two distinct groups.
What would those two distinct groups be?
10 a.m.
President and Chief Executive Officer, Business Development Bank of Canada
The first group would be people who have done securitization before and are used to dealing with large amounts. Examples of them would be Ford Credit, Chrysler, GMAC, Nissan--the large players. The second group is made up of smaller corporations that still do equipment leasing, auto leasing, and so on, but that in some cases have never done securitization before and certainly could not reach the $300 million minimum of the large enterprise tranche. So those would be smaller companies.
10 a.m.
Liberal
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
It wouldn't necessarily be one company. So it's not as if just Nissan received part.... One group means more than one particular organization.
10 a.m.
President and Chief Executive Officer, Business Development Bank of Canada
I'm sorry if that wasn't clear. The $10 billion was offered to a total of 15 organizations, who will collect—
10 a.m.
President and Chief Executive Officer, Business Development Bank of Canada
There's $11 billion in total that we've committed now; $10 billion, the large tranche, was offered to 15 companies; and the small tranche, the $1 billion, had nine different companies in there.
10 a.m.
Liberal
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
Okay, that was my question. So of the $11 billion, the maximum you would lend to somebody would be $600 million?
10:05 a.m.
President and Chief Executive Officer, Business Development Bank of Canada
No, there are a couple of large numbers in there exceeding $1 billion.
10:05 a.m.
Liberal
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
And the minimum would have been $300 million?
10:05 a.m.
President and Chief Executive Officer, Business Development Bank of Canada
Yes, $300 million, that's correct.
10:05 a.m.
Liberal
10:05 a.m.
President and Chief Executive Officer, Business Development Bank of Canada
They will basically now go back and package their.... Let's take the example of autos, because that's one we're all familiar with. They will take, let's say, their auto leases or auto loans and create a bundle of those, adding up to $300 million. This would be looked at by rating agencies to make sure we're comfortable—
10:05 a.m.
Liberal
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
The same rating agencies that rated the last ABCP...?
10:05 a.m.
President and Chief Executive Officer, Business Development Bank of Canada
The answer is yes, but I suspect they'll be substantially more prudent; plus there's the fact that we're also going to have our own team reviewing this. So we'll make sure it's all duly triple-A; and if it's triple-A, we'll be issuing the cheque.
10:05 a.m.
Liberal
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
I guess the question is that we've heard from Tricor, one of the corporations that came before the committee, and my understanding is that they didn't receive any part of this, whether it be the first tranche or second, the first group or second. My understanding is they have experience but they didn't receive any of the money.
Would you like to comment on that?
10:05 a.m.
President and Chief Executive Officer, Business Development Bank of Canada
Quite candidly, I cannot comment on that specific file.
There are some who could not get to the $100 million minimum threshold. Unfortunately, the facility, as developed by the Department of Finance, was to restart the asset-based security. When it was conceived by Finance, I think everyone had in mind a minimum tranche of $300 million. It's only when we spoke to the various stakeholders that we recognized collectively—Industry Canada, Finance, and us—that we had to create a second tranche for smaller businesses. But it was not conceived to help someone out.
10:05 a.m.
Liberal
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
If you give me a couple of weeks, I can come up with $100 million. I don't think I can do that overnight. You have to provide some time for somebody to put a package together, whether it be $100 million or $300 million.
This is my last question. You spoke about the other billion dollars being a first round and then a second round. I'm not sure how I can reconcile the $12 billion. If you're giving $11 billion to the large enterprises, and then there's another $1 billion that you've given to small enterprises, and another $1 billion that you're going to give later, it comes out to $11 billion plus $1 billion plus $1 billion, which is $13 billion.
10:05 a.m.
President and Chief Executive Officer, Business Development Bank of Canada
No. Let me try to reconcile the numbers.
We have $12 billion to allocate. The first allocation was done in two pieces, $10 billion and $1 billion, which leaves $1 billion for the month of August.
10:05 a.m.
Liberal
Massimo Pacetti Liberal Saint-Léonard—Saint-Michel, QC
In terms of large enterprises, you have $11 billion.