BMO bares all
Three cheers for the fulsome disclosure coming out of Bank of Montreal (BMO:TSX) this morning regarding their SIV exposure. The headline alone (“BMO Financial Group to Reflect Charges in First Quarter Earnings, Proposes Support for Links and Parkland Structured Investment Vehicles (SIVs), Provides Update on Apex/Sitka Trust and Announces Senior Management Changes“) makes you think the IR team recognized that they needed to draw as much attention to the situation as they could, rather than just focus on the $490 million charge being taken. Management made an interesting decision with the Links SIV: instead of taking the US$12.3 billion Links SIV onto their balance sheet, it appears BMO will be providing US$11 billion of “liquidity support” instead. I’m not sure what the practical difference is, but I wouldn’t doubt that it makes a world of difference to the capital ratios. Ah, the wonders of accounting rules.
Joe and Jill Retail will be grateful for the update (see prior post “Joe & Jill Retail deserve to know BMO’s SIV exposure” February 17-08). It’s as though the walls of the blogosphere have ears.