Warning: The Bank of Canada is on track to lose over $5 billion in 2023.
The Bank of Canada released it’s 3rd Quarter report on Nov 17, 2023, and no one wants to talk about, not even the Conservatives, because it’s so bad. They don’t want to scare Canadians.
The Bank incurred net losses of $1,459 million ($1.46 billion) and $4,461 million ($4.4 billion) for the three- and nine-month periods ended September 30, 2023, respectively, primarily because the interest incurred on deposits was greater than the interest earned on investments. The interest expense on deposits was higher as a result of increases in the Bank’s policy interest rate, which increased from 0.25% in the first quarter of 2022 to 5.00% in the third quarter of 2023
Last year the Bank of Canada had it’s first loss in its 87-year history, and they paid themselves nearly $10 million in performance bonuses. This year the bank is on track to lose over $5 billion because of band borrowing.
Suspiciously this does not sound like a simple interest differential. Most of their investments are in Government of Canada bonds which they may have had low interest for political reasons. A guess on my part. Taking from Peter to pay Paul. Nothing to worry about.
The B of C’s bond portfolio is comprised mainly of longer term government of Canada bonds which overwhelmingly pay very low interest, as they were purchased when rates were much lower than today. Canadian banks are legally required to park a certain portion of their money on short term deposit at the B of C, for which they are paid interest. Until recently, those deposits earned less interest than the B of C was earning on its longer term bond portfolio, so there was always a positive margin. Now that rates are in the 5% neighborhood, that situation has reversed and the B of C actually incurs a negative margin.
They’re likely to try to hide these losses with accounting tricks like “deferred assets” but the fact remains that the losses are real.
More than that, the value of those bonds has cratered. They have massive unrealized losses as well, think Silicon Valley Bank.
All Wars are Bankers’ Wars:
https://jermwarfare.com/conversations/michael-rivero-on-all-wars-being-bankers-wars
All bores are wankers’ bores, more like it.
So, who manages the BoC and how did they get the job?
Was the performance bonus because their target was to lose money?
You can blame Tiff but the vast majority of bond buying was done by Poloz who levered the BoC then quit (Poloz was a Harper hire). Tiff was stuck with the shit trap: raise interest rates to hold inflation but bankrupt the BoC in the process. BoC is a walking bankrupt; why not mention this too?
banks became casinos that loan money when they were allowed to do “Financial engineering”. the amount they hold in derivatives (Betting on financial conditions, price of gold, interest rates) exceeds the TOTAL GNP of the entire planet.
Hopefully they give themselves (award themselves?) … at least $20 million after this performance.
Because of inflation…
The Bank of Canada building in Ottawa, looks nice and I especially like Arthur Erickson designed atrium and addition areas.
Hopefully they don’t have to turn the temperature down in those buildings to meet some arbitrary standard of carbon usage, or use low wattage lightbulbs, or, my personal favorite, the low flow toilets you have to flush 3 times.
The Canadian peso is on the Venezuelan fast track.
https://www.bankofcanada.ca/about/
So from the Bank’s own website the reason for its existance “to regulate credit and currency in the best interests of the economic life of the nation.”
It would appear that the bureaucrats in Ottawa are failing on a massive scale unheard of in Canadian history. I’ve posted a number of articles concerning the problems regarding the Canada Revenue Agency and other government ministries in the past few weeks. Now we have this from the body that is in charge of regulating the banking industry in Canada. We are faced with two choices, and only two choices at this point:
a) We meekly accept that we have been lied to and conned by the bureaucrats and politicians that are supposed to serve us or,
b) We fire them all lock, stock, and barrel and start over again after the revolution, because that is what it is going to take to get back the country that so many sacrificed their all to give us a country that we were once proud of.
https://www.bankofcanada.ca/wp-content/uploads/2010/07/organizational_chart_november2023_high_level.pdf
The CRA is full of scammers working on the inside. When I called, 3 people asked for my information then just hung up. Not to mention the bank also has foreign call centers. (BMO is in El Salvador, we asked the man on the phone) That should be illegal.
I remember the line “the best time to borrow money is when rates are low”.
BoC borrowed low with floating rate and invested low with a fixed rate. Poloz bailed out Trudeau and torched the BoC in the process.
CPC should be asking if the big negative retained earnings of the BoC are showing up in Trudeau’s deficits or are hidden (as if the GoC would allow the BoC to go under).
How many other National Banks are in the same shape?
How many commercial banks are in the same shape?
Call me naïve and under-educated.
How will this affect the savings of a retiree who has a few hundred K in a savings account?
It shouldn’t. The value of the dollar will.