For the past couple of days, the bank office has enjoyed a saturnine silence. Meetings after meetings to discuss possible market outlooks and projections still lead us back to where we started. In this unpredictable storm, there is at best guesses on where it will hit next. This leaves us with no realistic analytical positions and preparations. One thing certain, most company will be under water this coming year.
Our high executives addressed the financial crisis in a board meeting today. The sepulchral tone sent chills down your spine as you listened to the list of red numbers and missed targets.
“The US credit crisis has led to the Canadian real estate market woes which have spread to the retail and trade sectors. While we has managed to limit our interim financing portfolio, with Bank of Canada rate cuts and fellow banks using high over-competitive interest rates to attract deposits, whatever profit we had made in the first half of the year has been wiped out. Though we are still in the green this year, with deteriorating market conditions, it will be hard to not break even in 2009.
Our only advantage at the moment is that while other financial institutions are either completely reluctant to offer loan facilities or that they are incapacitated in the amount they can offer, we are still sitting on a strong reserve and open to loan opportunities. ”
With further interest rate cuts expected from Bank of Canada, the spread will diminish even further. This means that for those who need loans, they would have to pay a rate approximate Prime plus 2% or more. Since the few corporate sources for loans will be extremely selective, less than preferred customers will have difficulties in securing a loan. And do not assume that if you are willing to pay high interest rates, there will be plenty of private lenders available. A majority of private lenders have their own equity intricacies and others will be more tied to the sidelines on a wait-and-see mindset.
The lack of lending will adversely affect businesses, both in operations and investments. Many will not survive and those that do will be considerably downsized. What will happen to all the jobless?
Things will get tougher, very quickly. Scary, isn’t it?
Our high executives addressed the financial crisis in a board meeting today. The sepulchral tone sent chills down your spine as you listened to the list of red numbers and missed targets.
“The US credit crisis has led to the Canadian real estate market woes which have spread to the retail and trade sectors. While we has managed to limit our interim financing portfolio, with Bank of Canada rate cuts and fellow banks using high over-competitive interest rates to attract deposits, whatever profit we had made in the first half of the year has been wiped out. Though we are still in the green this year, with deteriorating market conditions, it will be hard to not break even in 2009.
Our only advantage at the moment is that while other financial institutions are either completely reluctant to offer loan facilities or that they are incapacitated in the amount they can offer, we are still sitting on a strong reserve and open to loan opportunities. ”
With further interest rate cuts expected from Bank of Canada, the spread will diminish even further. This means that for those who need loans, they would have to pay a rate approximate Prime plus 2% or more. Since the few corporate sources for loans will be extremely selective, less than preferred customers will have difficulties in securing a loan. And do not assume that if you are willing to pay high interest rates, there will be plenty of private lenders available. A majority of private lenders have their own equity intricacies and others will be more tied to the sidelines on a wait-and-see mindset.
The lack of lending will adversely affect businesses, both in operations and investments. Many will not survive and those that do will be considerably downsized. What will happen to all the jobless?
Things will get tougher, very quickly. Scary, isn’t it?
Then again, I am reminded of the saying,
"There is no tough time, just tough people."
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