The One Condo development project, at Bloor One West, in Toronto, on June 4. The receiver of the tower is seeking to sell the unfinished skyscraper for at least $1.2-billion.Abhijit Alka Anil/The Globe and Mail
Getting caught up on a week that got away? Here’s your weekly digest of the Globe’s most essential business and investing stories, with insights and analysis from the pros, stock tips, portfolio strategies and more.
Real estate insolvencies in Canada set to surpass levels of global financial crisis
Canada is on track to reach about 240 real estate insolvencies this year as real estate developers continue to face elevated interest rates and growing construction costs, Rachelle Younglai reports. The number of insolvencies has been rapidly climbing over the past year and is now on track to surpass levels of the global financial crisis, according to data from the federal Office of the Superintendent of Bankruptcy. From January to May this year, there was an average of 20 real estate, rental or leasing insolvencies in Canada every month. That still does not include the number of developers and projects that have been forced into receivership for not paying bills. One of the most notable projects to default on its loans is Sam Mizrahi’s luxury downtown Toronto condo tower The One, with lenders owed $1.6 billion.
Inside the mess at TD Bank
In 2012, Toronto-Dominion Bank wanted to infiltrate New York City with the idea to build out a branch network brick by brick until the streets of all five of the city’s boroughs were flooded with TD green. Against all odds, it worked. TD muscled its way to a top-three market share for retail banking, and the strategy became the stuff of internal lore. But a decade in, the conquest has come back to haunt the bank. The bank of now facing a lengthy probe by U.S. regulators and law enforcement agencies into the lender’s anti-money-laundering practices. Tim Kiladze, Rita Trichur and James Bradshaw and Stefanie Marotta spent the last year investigating the TD Bank scandal and speaking to more than 30 sources – and report that “a troubling picture has emerged: TD’s problems run much deeper than some rogue employees in Queens.”
Decoder: Canadians are still making their mortgage payments – more so than Americans
Good news: Many Canadians are keeping up with their mortgage payments despite high interest rates. According to figures published this month by the Canadian Bankers Association, roughly 9,500 residential mortgage were overdue by three or more months – which amounts to only 0.19 per cent of more than five million total mortgages. But many borrowers have yet to feel the full brunt of higher interest rates. The Bank of Canada said around half of all outstanding mortgages had yet to renew at higher rates. Still, the mortgage delinquency rates run much higher in the United States. Matt Lundy takes a closer look at the figures in this week’s Decoder.
Former RBC CFO Nadine Ahn sues bank for nearly $50-million
Nadine Ahn, former chief financial officer at Royal Bank of Canada, is suing the bank for nearly $50-million in response to her firing four months ago, after an internal investigation that allegedly found she had an undisclosed personal relationship with a colleague that led to preferential treatment, James Bradshaw reports. The lawsuit filed with the Ontario Superior Court of Justice claims that “RBC’s allegations are patently false,” and that the way it broadcast her termination in a news release “caused her devastating, worldwide reputational harm, and impairs her ability to earn a living.” RBC has since fired back against the wrongful termination lawsuit in a 29-page statement of defence and counterclaim filed with Ontario Superior Court of Justice. The court filing alleges that Ms. Ahn “abused the power of her office as CFO,” repeatedly breached her fiduciary duties to RBC, and later “failed to be forthright and honest when questioned about her conduct.”
Ottawa’s tweaks to capital gains taxation for small businesses fall short, lobby groups say
Earlier this week, Ottawa announced several tweaks to its new Canadian Entrepreneurs’ Incentive. The changes lower the capital-gains taxes that eligible business owners pay when they sell their companies, on profits up to a lifetime maximum of $2-million, Mark Rendell reports. The CEI will now be open to people selling agriculture and fishing properties, which had previously been excluded. But business groups say the changes don’t go far enough because business owners and entrepreneurs are still facing a higher tax burden when they sell their companies. The Liberal government increased the inclusion rate on capital gains – money made by selling assets – during the April budget. But the change was met with outrage from across the business community, with many warning that it could hamper investment and discourage entrepreneurship.
Scotiabank pays $2.8-billion for minority stake in U.S. regional bank KeyCorp
Bank of Nova Scotia has set its sights on the United States. The bank surprised markets this week with its decision to buy a minority stake in U.S. regional bank KeyCorp., which operates roughly 1,000 branches across 15 states under the name KeyBank National Association. Jameson Berkow reports that it is a strategy that no Canadian bank has tried before. Instead of buying direct control of an American bank – as every other large Canadian bank has done in recent decades – Scotia is taking the unusual step of acquiring a minority stake in KeyCorp and has even promised to keep its stake below 20 per cent for at least the next five years.
Take our business quiz for the week of August 16
d. Royal Bank of Canada. Nadine Ahn, former CFO at Royal Bank, is suing the bank in response to her firing four months ago, after an internal investigation that allegedly found she had an undisclosed personal relationship with a colleague that led to preferential treatment.
Get the rest of the questions from the weekly business and investing news quiz here, and prepare for the week ahead with The Globe’s investing calendar.