Monthly Archives: October 2018

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Royal Bank sells U.S. operations for $3.45 B to PNC Financial Services: report

TORONTO – Royal Bank of Canada has reportedly agreed to sell its money-losing retail banking operations in the United States to PNC Financial Services Group Inc. for $3.45 billion, a move that would finally bring an end to the bank’s foray south of the border.

The deal, first reported Sunday by The Wall Street Journal, is expected to be announced on Monday.

Analysts had estimated the bank’s potential valuation range between US$2.8 billion and US$3.7 billion.

RBC (TSX:RY) operates under the RBC Bank banner in the U.S. with more than 400 branches throughout North Carolina, South Carolina, Virginia, Georgia, Florida and Alabama.

Pittsburgh-based PNC has more than 2,500 branches across 15 states and the District of Columbia.

National Bank Financial analyst Peter Routledge said the deal would be a positive for Canada’s largest bank.

He said Royal Bank has better opportunities for re-investing shareholder capital in its global wealth management and capital markets businesses.

“In both those segments, RY is comfortably profitable and enjoys relative competitive advantage,” Routledge wrote in an email to The Canadian Press.

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“Regardless of the agreed price, the benefits of re-directing both capital and senior management, board time towards more shareholder-friendly growth strategies is an unequivocal positive for the bank.”

RBC chief executive Gordon Nixon recently said the bank was reviewing its U.S. options, including the possibility of selling some assets in the country, which is still embroiled in a housing market crisis amid continuing high unemployment.

Canada’s big banks have had mixed success with their ventures into the world of U.S. retail banking.

TD Bank bet big when it acquired its operations first with a majority interest in Banknorth and then consolidating its ownership in 2007. Since then the U.S. franchise has grown to more than 1,250 branches up and down the East Coast with deals for Commerce Bank in 2008 and South Financial Group in 2010.

And while Bank of Montreal started with a smaller franchise in the Chicago area _ similar to RBC’s investment in the U.S. southeast _ it has since doubled down with its $4-billion purchase of Milwaukee-based bank Marshall & Ilsley Corp.

Scotiabank has focused on the rest of the Americas, including the Caribbean and Latin America.

Royal Bank shares closed up 62 cents at $54.31 on the Toronto Stock Exchange on Friday.

Rep. Giffords and husband Mark Kelly returning to Houston after Father’s Day trip to Tucson

PHOENIX – Rep. Gabrielle Giffords returned to Houston on Sunday after spending the weekend with her family in Tucson.

The visit was the Arizona Democrat’s first trip home since was shot in the head at a January political event. Six people were killed in the attack and 12 others besides the congresswoman were wounded.

Giffords boarded a private plane late Sunday morning after spending nearly two days in Tucson, Giffords Chief of Staff Pia Carusone told The Arizona Republic. Details of the visit by Giffords and astronaut husband Mark Kelly were being kept private at his request.

Kelly announced the visit in a news release Friday, and the couple and one of Kelly’s daughters arrived in Tucson that evening.

“We’ve been dreaming of this trip for some time,” Kelly said in a statement. “Gabby misses Tucson very much and her doctors have said that returning to her hometown could play an important role in her recovery.”

Carusone and Giffords spokesman C.J. Karamargin did not immediately respond to calls from The Associated Press on Sunday.

Giffords was released from a Houston hospital Wednesday and is set to start outpatient therapy. She had been in the rehab facility since late January, a few weeks after the shooting.

Giffords is now living in Kelly’s home in League City, a town 26 miles (42 kilometres) south of Houston. She will continue outpatient therapy at TIRR Memorial Hermann, the same hospital where she underwent rehabilitation.

Giffords has been struggling to relearn how to speak and walk, and will be assisted by a 24-hour home health provider, according to a statement from the hospital.

Her alleged assailant, Jared Loughner, has pleaded not guilty to 49 charges stemming from the Jan. 8 shooting. He has been at a Missouri prison facility since a judge declared him mentally incompetent to stand trial May 28. Mental health experts will try to make him psychologically fit.

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Fire rips through Venezuelan prison as gunfights between troops and inmates continue

GUATIRE, Venezuela – Fire ripped through a prison where thousands of Venezuelan troops struggled to put down a revolt by inmates on Sunday as dozens of horrified relatives tried to watch the fighting.

Officials gave few descriptions about the progress of the three-day battle at the Rodeo I prison and did not say if more people had been killed or injured beyond the three dead and 18 wounded reported on the first day of the clash. Gunfire continued to rattle from the compound.

Deputy Justice Minister Nestor Reverol told state television the pre-dawn fire was caused by a short circuit, and that inmates had been evacuated before flames engulfed a building. Some relatives outside said that prisoners with cellphones had told them troops started the blaze.

Evelyn Rodriguez, 27, climbed a nearby hill for a view and gasped when she peered through binoculars to see the prison blacked by the fire.

“My husband and my brother were inside that building,” Rodriguez said, trying to hold back tears. “I have no idea what has happened to them.”

The violence erupted in the El Rodeo I prison as troops searched for weapons, and has since extended to Rodeo II, an adjacent prison. A riot at El Rodeo I on June 12 left 22 dead.

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It was not clear how many inmates remained at the prison or how many were resisting the troops. Justice Minister Tareck El Aissami said Sunday that at least 2,500 inmates had been transferred to other prisons.

A 5,000-strong security force, including 3,500 National Guard troops, was joined on Saturday by 400 soldiers from an elite army paratroop unit, according to officials.

Journalists from The Associated Press watched half a dozen armoured vehicles circle courtyards inside the compound on Sunday. Troops lined up along tree-covered hillsides surrounding the prisons and repeatedly fired volleys of tear gas canisters.

Gunfire erupted sporadically throughout the day.

Venezuela’s severely crowded prisons have suffered repeated violent outbursts as rival gangs often fight for control of cellblocks and sell weapons and drugs with the help of corrupt prison guards.

The country’s 30 prisons were built to hold about 12,500 prisoners but instead hold about 49,000, according to the Venezuelan Prisons Observatory, a group that monitors prison conditions.

Last year, 476 peopled died and 967 people were injured in the country’s prison system, according to figures compiled by the Inter-American Commission on Human Rights.

Human Rights Watch also said in a recent report that about three out of four inmates in Venezuela’s prison system have yet to be sentenced due to backlogs in the country’s slow-moving justice system.

Relatives and friends of prisoners complained on Sunday that authorities have not informed them if their loved ones are safe.

“This is a tremendous Father’s Day present they’ve given us,” Rodriguez said sourly.

No progress on the postal front as Canada Post strike-lockout continues

TORONTO – The weekend brought no movement on the postal front as negotiations remain stalled between Canada Post and its locked-out urban workers.

Both sides had said they were scheduled to meet, but face-to-face talks failed to materialize even as the dispute heads into a week where back-to-work legislation is likely to be tabled in Parliament.

Denis Lemelin, national president of the 48,000-member Canadian Union of Postal Workers, said he’s bracing for a federal order to head back to the grind.

“We expect the government will put forward something,” he said. “It’s like the real negotiation between Canada Post and the union is finished.”

Lemelin said the fact the government has indicated it might step in and “rescue” the post office in the labour dispute suggests Canada Post has been waiting for Ottawa to intervene ever since it locked-out employees last week.

Labour minister Lisa Raitt has said she intends to introduce legislation this week after all urban postal operations were suspended last Wednesday. Postal workers had been staging rotating strikes across the country since June 3 before they were locked-out.

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“We will fight it, that’s clear,” said Lemelin, adding that the union has been in talks with the opposition parties, looking for support.

“For us the back-to-work legislation won’t be any good for the future of the post office.”

Meanwhile, Canada Post said it is still eager to work out a negotiated settlement with the union.

“We’ve said all along we are committed to negotiating,” said spokesman Jon Hamilton. “We have come to the table with a sense of urgency that hasn’t been met.”

The Crown corporation said Sunday that there was still time to reach a deal without Ottawa stepping in if the union would look more closely at the existing deal on the table.

“The union strike activity had us in a death-spiral of uncertainty” said Hamilton. “We took action to try and move things forward, kick start the process, unfortunately we’re not seeing that in return from the union.”

The job action had already cost Canada Post $100 million in lost revenue.

The Crown corporation has said the main sticking point in the dispute is the union’s demand for staffing levels beyond the capability of Canada Post, adding that wages were not the key disagreement. The union has been emphasizing working conditions and safety issues, as well as arguing that new employees would receive inferior wages and pensions.

NDP Leader Jack Layton has already weighed in on the labour dispute and the potential legislation the House might have to deal with next week.

“When it comes to the legislation itself, we’ll read it, we don’t support the notion of forcing workers back to work, especially when it’s the government that has shut the doors of their work place,” he said Sunday at the party’s convention in Vancouver.

“What I believe the prime minister should do is open the doors to Canada Post. I don’t think it’s acceptable that a prime minister is allowing a Crown corporation that he controls to shut the doors of our postal service.”

Layton added that a negotiated settlement between the two parties would be the best way to resolve the dispute.

The union and Canada Post are scheduled to talk Monday.

Labour analyst Maurice Mazerolle said both sides will have to act fast if they want to reach a deal without Ottawa’s help as Raitt is unlikely to wait more than a week before passing legislation.

“I think the government is taking this very seriously,” said the co-director of Ryerson University’s Centre for Labour Management Relations, adding that the dispute had been handled well by both sides until the lock-out.

“My guess is the post office is betting that the government intervention will result in a better deal than one they could get with the postal union,” said Mazerolle.

Despite the lock-out, volunteer postal workers will be delivering social assistance and pension cheques next week.

Union workers also plan to stage a rally protesting back-to-work legislation in Ottawa Monday.

Canadians prepare to set sail for Gaza, call on Ottawa to denounce blockade

MONTREAL – A group of Canadians boarded flights Sunday to join a convoy of ships that is going to try to bring aid to Palestinians in the Gaza Strip.

The group was planning to meet in Greece on Monday and join an international flotilla that is expected to set sail in the coming days.

Israel has indicated it will stop the ships from getting to Gaza, which is under a naval blockade.

Lyn Adamson, one of the 32 Canadians taking part, called on the federal government to support the mission and take a stance against the blockade.

A flotilla to Gaza last year ended in bloodshed, when nine people were killed and 45 injured after Israeli soldiers boarded a Turkish ship.

Adamson is concerned for the group’s safety but said passing on the trip would be “unconscionable.”

“It’s simply a humanitarian mission and we want to help the people in Gaza get back on their feet,” she said Sunday before boarding a flight in Toronto.

“Now the Israelis don’t seem to understand that and they have threatened many things… Our government should be standing up to them.”

Foreign Affairs Minister John Baird has called the convoy “provocative.”

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Manon Masse, another Canadian delegate leaving Sunday, said such comments are an attempt by the Harper government to turn attention away from the humanitarian goal of the mission.

“Of course we want to provoke, but not the Israeli army,” said Masse, a candidate for the leftist party Quebec Solidaire. “We want to provoke the international community and civil society to say to Israel: ‘Stop.’”

The Canadians say they are bringing medicine and medical supplies to the Palestinians, and are open to having the boats inspected by the United Nations or another third party group.

Israel, however, has vowed to prevent the flotilla from docking.

On Sunday, an Israel Navy commander extended a stern warning to organizers.

“The Navy has prevented and will continue to prevent the arrival of the ‘hate flotilla’ whose only goals are to clash with (Israel Defence Forces) soldiers, create media provocation and to delegitimize the State of Israel,” Adm. Eliezer Marom said during a graduation ceremony of members of Israel’s navy, according to the Israeli newspaper Ha’aretz.

The Canadians are to be joined on the 10-ship convoy by delegates from Australia, Belgium, Denmark and Germany.

US nuclear plant avoids shutdown after Missouri River rises near facility

OMAHA, Neb. – The Missouri River rose to within 18 inches (50 centimetres) of forcing the shutdown of a nuclear power plant in Nebraska but stopped and ebbed slightly, a plant spokesman said Monday.

The river has to hit 902 feet (275 metres) above sea level at Brownville before officials will shut down the Cooper Nuclear Plant, which sits at 903 feet (275 metres).

Nebraska Public Power District spokesman Mark Becker said the river rose to 900.56 feet (274.49 metres) on Sunday, then dropped to 900.4 feet (274.44 metres) later in the day and remained at that level Monday morning.

The plant was operating at full capacity, Becker said.

The utility sent a “notification of unusual event” to the Nuclear Regulatory Commission when the river rose to 899 feet (274 metres) early Sunday morning. The declaration is the least serious of four emergency notifications established by the federal commission.

“We knew the river was going to rise for some time,” Becker said Sunday. “It was just a matter of when.”

The plant has been preparing for the flooding since May 30. More than 5,000 tons of sand has been brought in to construct barricades around it and access roads, according to NPPD.

A spokesman for the Nuclear Regulatory Commission said the NRC thinks OPPD managers have “done everything that they need to do to respond to the current conditions” at the nuclear plant.

Flooding remains a concern all along the river because of the massive amounts of water released by the Army Corps of Engineers. The river is expected to rise as much as 5 to 7 feet above flood stage in much of Nebraska and Iowa and as much as 10 feet (3 metres) over flood stage in parts of Missouri.

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Associated Press writer Nelson Lampe contributed to this report.

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Questions and answers about the debt crisis in Greece

Is Greece on a path to stability or just delaying an inevitable disaster?

The answer won’t come for weeks or months, but financial analysts are not optimstic.

Greece is in talks with international creditors about a second package of rescue loans similar in size to the $157 billion bailout it received last year. The aim is to keep Greece from defaulting on its crushing national debt.

But to get the new loans, Greece will probably be forced to adopt new austerity measures, such as tax hikes and pension cuts, and the prospect of new cuts has already led to unrest in Athens.

Financial indicators, such as what it costs to insure Greek debt, suggest a default is extremely likely. Here are some questions and answers about the Greek debt crisis.

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Q: What happened Sunday?

A: The prime minister of Greece, George Papandreou, confirmed that his nation was talking with world lenders about a second financial rescue package “roughly equal” to what Greece received last year.

In Luxembourg, European finance ministers were meeting to consider whether to release about $17 billion to Greece from the first rescue package.

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Europe and the International Monetary Fund say new loans for Greece are contingent on Greece’s passing budget cuts before the end of the month. Those measures have already led to angry protests and forced the prime minister to reshuffle his government.

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Q: Who is paying for the Greek bailout?

A: Other European nations and the International Monetary Fund. Germany had demanded that the private sector, primarily international banks that hold Greek government bonds, share some of the pain by waiting longer to be repaid. Germany softened its demands on Friday by agreeing that any burden-sharing by private bondholders be strictly voluntary, calming the financial markets.

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Q: How likely is it that Greece will default on its debt?

A: Bond traders are betting a default is almost certain. It now costs more than ever to insure Greek debt. At prices quoted Friday, the insurance contracts suggest an 80 per cent chance that Greece will default in the next five years, according to data from Markit, a financial information provider.

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Q: Why is a potential Greek default such a big deal?

A: Greece has an economy roughly the size of Washington state, but the real worry is about a domino effect. Or, to use a better analogy, says Guy LeBas, chief fixed income strategist at Janney Capital Markets, think of it as a spider web – pluck one string and the whole thing shakes.

Banks lend money to governments and to each other to make sure everyone has enough cash to operate every day, and banks insure each other’s debt. If Greece defaults, banks will charge more money to make loans or stop lending altogether. At the same time, they’ll have to raise at least $300 billion to cover insurance contracts on Greek debt.

That’s why many analysts are drawing comparisons to what happened after the collapse of Lehman Brothers, the storied investment bank, in 2008. Lending froze up around the world, all the way down to small businesses and individual borrowers in the United States. The credit crunch deepened the worldwide recession.

At the least, bond investors would demand higher borrowing rates from other deeply indebted European countries, including Ireland, Portugal, Spain, Italy and Belgium. Borrowing costs for Ireland and Portugal have already jumped to record highs, with 10-year interest rates topping 10 per cent. The U.S. rate is about 3 per cent.

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Q: What is Greece doing about all this?

A: The Greek government wants to enact further austerity measures, such as raising taxes, cutting public wages and selling state assets. And it will probably have to before it gets a fresh bailout package. But the public has reacted angrily, staging violent protests in central Athens. The union that represents employees in the state-run electric system has threatened a strike and blackouts.

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Q: How would a wider European crisis hurt the U.S.?

A: It’s difficult to say. American banks say they could handle a crisis. All told, they were exposed to about $43 billion in Greek debt at the end of September 2010, compared with $113 billion tied to Ireland and $187 billion to Spain.

But the investments are opaque. It’s impossible to tell which banks are holding more Greek debt than the others.

“It would be naive to think their banking crisis wouldn’t affect us after what we saw in the last financial crisis,” warns Carl Weinberg, chief economist at High Frequency Economics.

When credit begins to freeze or it gets more expensive to borrow, other European countries could end up in a similar situation to Greece’s – saddled with rampant debt and unable to borrow more money to pay it off.

Many of the economies in Europe are under that cloud, raising fears of a massive, even unprecedented, chain of defaults that slows the world economy.

Banks in the United States could end up with bad bonds on their books, just as they’re working off bad loans from the mortgage crisis a few years ago. American money market funds are heavily invested in European bank debt, too.

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Q: What about the dollar?

A: Even if a wider crisis is averted, a prolonged slump in Europe would probably make the dollar stronger compared with the euro. For foreign customers, a stronger dollar makes American goods more expensive. Companies in the Standard & Poor’s 500 index get 20 per cent of their profits from Europe. Sustained strength in the dollar could hit profits of large corporations like Boeing and DuPont because they rely on selling to foreign customers, who might not be able to afford the markup.

Prada tees off for next summer, using golf as inspiration for eccentric, offbeat collection

MILAN – Golf inspired Prada’s offbeat, whimsical menswear collection for next spring and summer.

“I was using golf as an excuse to make it eccentric. Even if I hate golf and don’t play, it is completely international,” designer Miuccia Prada said backstage after the preview menswear show Sunday evening.

The motif, she said, allowed her to merge ideas and cultures, although the basic theme of the spring-summer 2012 collection was “Americana.”

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Prada laid artificial turf for the show inside a cavernous industrial space in central Milan, just the thing for the riveted soles of the fringed golf shoes worn by the models – or were they caddies? Several carried floral printed or studded golf bags, with Prada-branded golf clubs.

Sporting cocky golf hats, the models seemed to enjoy themselves as they snaked down the grassy runway, to a lively remix of Cole Porter’s “Summertime.”

Prada said she had a good time putting together the colorful show. “It’s international and crosses all cultures, I mean completely crazy,” the designer told The Associated Press, laughing at her own enthusiasm.

And yet the collection was perfectly balanced featuring whimsical comic book figures on shirts, trousers and jackets. A rodeo-style shirt with studded yolk featured cowboys on bucking broncos, teepees and dancing couples. Some trousers showed a miniature golfing tableau. A jacket was printed with musical figures, including a Rockabilly guitarist and a conductor in boxer shorts.

Crisp days call for quilted jackets that fit at the waist, some in the comic book prints, others in bold floral patterns.

The backbone of the collection came in the well-tailored jackets, trousers and sweaters in neutral colours, from tan to black, that became the blank canvas for Prada’s whimsy.

Prada said her motto for the collection was “no design.” Instead, the magic was in combining the elements.

The pieces, according to Prada’s mission, are not just conversation pieces. They are about finding ways to have fashion influence life.

“It is always political for me,” she said.

Ferragamo’s new, young designer steeps tradition with fresh modern energy

MILAN – Sometimes an obsession is a good thing. At least if your name is Massimiliano Giornetti and you design clothes for the steeped-in-tradition Ferragamo label.

“I am obsessed with elegance and beauty,” said the new creative director of the Florentine brand famous for its shoes and scarves, after a much-applauded show.

His goal is to reinvent the classic Ferragamo silhouette and give it a fresh modern energy “step by step.”

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The designer is certainly headed in the right direction with his spring-summer 2012 menswear collection unveiled Sunday.

Inspired by the compelling nonchalance of a 1930s artist – Pablo Picasso fits the picture – Giornetti creates a wardrobe that is elegant, but never stuffy.

His summer man sports a double-breasted suit with a shirt in the same material and high-waisted trousers with pleats. He strolls through life wearing a frayed raffia hat, vintage shades, and classic Derby shoes that allow him to escape into his romantic world.

Styles flow one into the other. A jacket resembles a shirt, a dressing gown morphs into a loose-knit cardigan, and a pair of canvas shoes double as slippers.

Materials range from hemp to washed fabrics with a sun-bleached effect. Colors are quiet beige and ivory, pastel greys, and eclectic navy blue.

“My dream is to create a new lifestyle with each collection where beauty and joy give new energy to the hectic world we live in,” the 37-year-old designer said.

We’re with you, Massimiliano.

Cairo’s two-run homer helps Reds beat Blue Jays 2-1 for first win over AL team

CINCINNATI – Miguel Cairo got the pitch he expected, right where he thought it would be.

Cairo hit a two-run homer in the sixth off Carlos Villanueva, stopping Cincinnati’s streak of 16 scoreless innings, and the Reds got their first win over an American League team this season, beating the Toronto Blue Jays 2-1 on Sunday.

The Reds had dropped their previous five interleague games against Cleveland and Toronto.

Bronson Arroyo (6-6) ended his streak of dismal days against the Blue Jays. The right-hander gave up five hits, including Aaron Hill’s homer, in a season-high eight innings. Arroyo had lost his last three starts and five straight decisions against Toronto.

“It feels good,” Arroyo said. “They’ve been beating me around pretty good, but that’s a totally different lineup.”

Villanueva (4-1) lost for the first time since Aug. 17, 2009, with Milwaukee, where he was a reliever the last two years.

Francisco Cordero pitched the ninth for his 15th save in 17 tries. He moved one ahead of Jeff Montgomery for sole possession of 19th on the career list with 305 saves. Hall of Famer Goose Gossage is next at 310.

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First baseman Joey Votto had three hits, after failing to reach base in the first two games of a special series. The Toronto native received the Lou Marsh Trophy before Saturday’s game honouring him as Canada’s top athlete for 2010.

He singled with one out in the sixth and came around on Cairo’s homer down the left-field line off a first-pitch fastball that was up and over the inside half of the plate – not where it was intended.

“It was supposed to go away there,” Villanueva said. “If I get it in the away lane, he’s not going to hit a home run to the opposite field. We had the right idea, it was just a little bit of a mistake.”

Cairo, who was playing third base while Scott Rolen rested for a day, wasn’t surprised when the ball came up and in.

“He got me out with a fastball in the last time up,” Cairo said, referring to his foulout. “I was looking for a pitch middle-in. I got a pitch and put a good swing on it.”

The homer ended a streak of 16 scoreless innings by the NL’s most prolific offence. The Reds lost the series opener 3-2, getting a pair of solo homers, and were blanked 4-0 on Saturday.

Villanueva gave up seven hits in seven innings. He ended a streak of 84 outings without a loss.

The Blue Jays have hit Arroyo hard. He gave up a career-high 10 runs while retiring a career-low three batters during a 14-1 loss at Toronto in 2008. A year later, he went back to Toronto and gave up seven runs in 3 2-3 innings of an 8-2 loss.

This time, he had only one shaky inning. Hill led off the fifth with a homer, and the Blue Jays got a runner thrown out at third to scuttle the rally.

Juan Rivera singled after Hill’s homer and took third on J.P. Arencibia’s single with none out. John McDonald popped up a squeeze bunt attempt. Votto caught it and threw to third to double up Rivera.

“I knew if he bunted that the runner might be off third,” Votto said. “They’d tried it earlier in the series, so I had an inkling that they might do it again. It worked out.”

The Reds knew it could wind up being the game’s pivotal defensive play.

“I told the guys on the bench, ‘That’s a game-saver right there,’” manager Dusty Baker said.

During their 4-0 win on Saturday night, Blue Jays outfielder Corey Patterson was tagged out at third after he incorrectly thought the ball had gone out of play, thwarting a rally.

NOTES: Blue Jays SS Yunel Escobar agreed to a two-year, US$10 million contract before the game. He gets $5 million each of the next two years. There are two club options for $5 million as well. … The Blue Jays go to Atlanta next for three games. The Reds have a three-game home series against the Yankees, making their first visit since 2003. … Arroyo is 3-5 against Toronto in 12 career starts.