Thank you.
Evidence of meeting #59 for Finance in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was change.
A recording is available from Parliament.
Evidence of meeting #59 for Finance in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was change.
A recording is available from Parliament.
8:20 p.m.
Liberal
Scott Brison Liberal Kings—Hants, NS
I want to understand some of the types of investments or groups that would be affected by this. I assume the China Investment Corporation would be affected, would that be right? So CIC could now invest in Canadian banks?
8:20 p.m.
Director, Financial Institutions Division, Financial Sector Policy Branch, Department of Finance
That's right. These amendments allow primary issuance only. If a Canadian financial institution wished to give CIC or any other public pool of capital an ownership stake, there could be that discussion.
8:20 p.m.
Liberal
Scott Brison Liberal Kings—Hants, NS
It would be subject to the limitations on foreign ownership, though.
8:20 p.m.
Director, Financial Institutions Division, Financial Sector Policy Branch, Department of Finance
It would be subject to approval by the Minister of Finance. For widely held institutions, our largest financial institutions, there are already limits on significant interest. Those limits would have to be respected under this as well.
8:20 p.m.
Liberal
Scott Brison Liberal Kings—Hants, NS
Prior to this the CIC, the Abu Dhabi Investment Authority, or the Russian Direct Investment Fund would not have been able to invest. Are they able to now, subject to ministerial approval?
8:20 p.m.
Director, Financial Institutions Division, Financial Sector Policy Branch, Department of Finance
Yes. As it says in the legislation, to invest in a Canadian financial institution a public pool of capital must be run on the basis of commercial objectives, must meet those objectives, and be subject to the approval by the Minister of Finance.
8:20 p.m.
Liberal
Scott Brison Liberal Kings—Hants, NS
Are you saying that a sovereign wealth fund investing in a Canadian financial institution or bank must be based on commercial objectives, as opposed to strategic ones?
8:20 p.m.
Director, Financial Institutions Division, Financial Sector Policy Branch, Department of Finance
The sovereign wealth fund must have commercial objectives in its mandate.
8:20 p.m.
Director, Financial Institutions Division, Financial Sector Policy Branch, Department of Finance
The public pool of capital, or the sovereign wealth fund, must be run on the basis of commercial objectives.
8:20 p.m.
Liberal
Scott Brison Liberal Kings—Hants, NS
So the objective must be to maximize returns over a period of time, as opposed to a strategic objective on behalf of a country. For instance, in Canada we have CPP, OMERS, Teachers, and AIMCo, and this would apply to all of these types of funds that previously would not have been able to do this.
8:20 p.m.
Director, Financial Institutions Division, Financial Sector Policy Branch, Department of Finance
There is currently a provision in the financial sector statutes that allows for investment by domestic pension funds. So some of the entities you mentioned would have been able to invest in federally regulated financial institutions today.
8:20 p.m.
Director, Financial Institutions Division, Financial Sector Policy Branch, Department of Finance
For clarity, you should ask the superintendent, because she interprets the statutes.
8:20 p.m.
Liberal
Scott Brison Liberal Kings—Hants, NS
My understanding was that the CPP Investment Board was able to invest in Canadian financial institutions prior to this.
8:25 p.m.
Director, Financial Institutions Division, Financial Sector Policy Branch, Department of Finance
They could do so if they were considered by the superintendent to be a pension fund. There is a provision in the statutes that allows pension funds in Canada to invest in federally regulated financial institutions.
8:25 p.m.
Liberal
Scott Brison Liberal Kings—Hants, NS
But I thought I heard you say earlier that they were not able to, prior to this. You used CPP--
8:25 p.m.
Director, Financial Institutions Division, Financial Sector Policy Branch, Department of Finance
I'm sorry. When I was responding to the previous question about the history, I should have added that there is also a provision that allows flexibility for pension funds, domestic pension funds.
8:25 p.m.
Liberal
Scott Brison Liberal Kings—Hants, NS
Oh, I see. So this does not actually change anything with regard to Canada Pension Plan or CPPIB. This change does not affect them.
8:25 p.m.
Director, Financial Institutions Division, Financial Sector Policy Branch, Department of Finance
I believe they would have the same treatment with the passage of this legislation as they do today.
8:25 p.m.
Liberal
Scott Brison Liberal Kings—Hants, NS
So it doesn't affect them. So the real difference, the delta here in terms of the policy effect, applies more to foreign sovereign wealth funds and pension funds. That's the big change here.
8:25 p.m.
Director, Financial Institutions Division, Financial Sector Policy Branch, Department of Finance
Yes.
8:25 p.m.
Liberal
Scott Brison Liberal Kings—Hants, NS
For instance, even WSIB or the Canada Post pension would already have the capacity to invest in Canadian.... And they do, I believe, invest in Canadian banks and financial institutions.
