Everything You Need to Know on Monday: Bank of Montreal Cuts More U.S. Investment Bankers for Cost Savings
Good morning mooers! Here are things you need to know about today's market:
● S&P/TSX 60 Index Standard Futures are trading at 1,342.60, up 0.23%
● Trans Mountain urged to modify criteria to boost crude quality
● Pembina Pipeline says potential Trans Mountain purchase not a priority
● Bank of Montreal cuts more U.S. investment bankers in drive for savings
Market Snapshot
Today, the Canadian dollar is trading at 73.18 cents US, a slight increase from Friday.
The S&P/TSX 60 Index Standard Futures (SXF) are currently trading at 1,342.60, which is up 0.23% from the previous close.
Top Stories
Commodities
Trans Mountain urged to modify criteria to boost crude quality
Major oil firms such as $シェブロン (CVX.US)$, $Canadian National Railway Co (CNR.CA)$., and $Suncor Energy Inc (SU.CA)$ are urging the managers of the newly expanded Trans Mountain pipeline to modify critical criteria to enhance the marketability of the oil being transported.
These oil producers are advocating for reductions in both the vapor pressure and the acidity of the crude allowed through the pipeline, arguing that the existing standards devalue the oil and limit the refineries capable of processing it. Trans Mountain, under Canadian government ownership, has not immediately replied to a request for comment on this matter.
These grievances cast a shadow over the commencement of the pipeline's long-overdue expansion, which nearly triples the capacity for moving oil from Alberta to the Pacific Coast. The oil companies are already disgruntled by the steep usage fees for the pipeline, which are partly due to the cost overruns that inflated the project's budget to US$34 billion. They contend that these issues should warrant reduced tolls.
Chevron, which procures crude from the pipeline, submitted a letter to the Canada Energy Regulator on Friday, stating that the vapor pressure limit is higher than what is permitted by the U.S. Environmental Protection Agency for refinery storage tanks in California. With two refineries in California, Chevron warns that not addressing the vapor pressure and acid limitations could hinder its ability to buy or process Trans Mountain's crude for those operations.
Suncor, known for its oil sands production, expressed in a regulatory document that the elevated vapor pressure limit would lead to blending the crude with less valuable hydrocarbons before it enters Trans Mountain. This practice would diminish the overall value of the oil transported by the pipeline.
Furthermore, Suncor, headquartered in Calgary, indicated that the pressure specifications could severely limit or even exclude certain markets for the company's products.
Pembina Pipeline says potential Trans Mountain purchase not a priority
$Pembina Pipeline Corp (PPL.CA)$ has expressed a continued interest in global export ventures but is not actively pursuing the acquisition of the Trans Mountain pipeline at this time. The Calgary-headquartered firm teamed up with the Western Indigenous Pipeline Group in 2021, aiming for an Indigenous-led stake in Trans Mountain.
However, the company reaffirmed on Friday that the uncertainties surrounding the pipeline project are too significant at present to consider buying it.
Cameron Goldade, Pembina's CFO, acknowledged the significance of the recent $34 billion expansion of the Trans Mountain pipeline. Yet, he noted that the state-run entity responsible for the project is currently embroiled in a dispute with oil companies regarding the pipeline usage fees. Since these fees constitute the pipeline's revenue, the eventual fee structure will greatly influence the value of Trans Mountain and the amount a potential buyer might offer.
Currently, the federal government owns the Trans Mountain pipeline, but it has made it clear that it does not intend to keep it long-term. The government has initiated the first phase of what is anticipated to be a two-part sell-off process.
Stocks to watch
Bank of Montreal cuts more U.S. investment bankers for cost savings
$Bank of Montreal (BMO.CA)$ is making more staff cuts within its U.S. investment banking division, with the latest round of layoffs affecting at least two managing directors. These cuts are part of the bank's ongoing cost reduction efforts, according to sources familiar with the situation. The sources, who wished to remain anonymous as the information is confidential, indicated that the health-care banking group was particularly impacted. The Bank of Montreal has chosen not to comment on the matter.
Previously, BMO Capital Markets had eliminated roughly 100 jobs in June, as reported by Bloomberg. In August, the bank unveiled a wider restructuring initiative aimed at achieving $400 million (US$293 million) in annual cost savings.
CEO Darryl White, in the bank's fiscal first-quarter earnings discussion in February, confirmed that the bank is on course to meet the savings target by the end of 2024. White noted a 4 percent reduction in expenses from the previous quarter and emphasized the bank's commitment to achieving positive operating leverage in the following quarter.
For the quarter ending January 31, the capital markets arm of the Bank of Montreal reported a 19 percent decrease in net income, which amounted to $393 million. This decline was attributed to lower trading revenue. The U.S. operations contributed just under half of the reported profit. Despite the drop, bank executives indicated that there was an uptick in activity levels at the time.
Source: BNN Bloomberg
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