Category: Uncategorized

Rogers income falls by 24 per cent in first quarter since summer network outage

Rogers Communications Inc.’s RCI-B-T +1.60%increase July network outage weighed on its third-quarter results, but executives called its impact “isolated” amid a wave of higher demand for wireless and mobile services that is boosting Canada’s telecommunications industry.

In the first quarterly report from the company to include the effects of the outage, Rogers said its net income fell 24 per cent compared withthe same period last year. It attributed the drop to billing credits it gave customers to compensate them for the outage, and to higher costs of financing its proposed acquisition of Shaw Communications Inc. SJR-B-T -0.11%decrease

Net income for the quarter ended Sept. 30 was $371-million, down from $490-million last year. Earnings per share were down 24 per cent to $0.71.

The outage lasted for most of a day and left millions of Rogers customers across the country without wireless, internet and home-phone service. The report says the customer credits amounted to a one-time charge of $150-million, split between $91-million in wireless credits and $59-million in cable credits. The charge was reflected on the company’s income statement as a reduction of revenue.

Despite the outage, the company’s overall revenue increased 3 per cent compared with last year, to $3.74-billion.

This was driven by strong growth in Rogers’s wireless division, in line with its peers. The company added 221,000 net mobile-phone subscribers, up 30,000 from last year. Of them, 164,000 were on postpaid plans (which are billed at the end of each month) – down 8.8 per cent from last year. The other 57,000 were prepaid, up 418 per cent.

Canada’s telecommunications giants all saw increased interest in mobile plans in the quarter. Rogers’s additions to its subscriber base lagged slightly behind Bell Canada, owned by BCE Inc., which added 224,000 new customers in the quarter, but surpassed Telus Communications Inc. T-T +0.07%increase, which added 150,000.

In an analyst call, Rogers chief executive Anthony Staffieri attributed this growth to increased travel, a widespread return to offices and increased immigration. The boost also came from higher demand for the company’s unlimited data plans, which are more expensive than its other plans. Data usage per user was up, on average, by a third over last year. But Mr. Staffieri warned that growth in revenue from roaming fees could slow next year if a recession curbs international travel.

Despite the public scrutiny after the outage, churn rates – the proportion of customers who decide to stop doing business with a company – came in lower than some analysts had expected. In an investor note, Canaccord Genuity analyst Aravinda Galappatthige noted that Rogers’s postpaid phone churn came in at 0.97 per cent, “notably higher” than last year, when it was 0.85 per cent. But the figure was still lower than the investment firm’s 1.02-per-cent estimate. Telus’s postpaid churn rate was 0.76 per in the quarter.

In the analyst call, Mr. Staffieri said that there was “nothing alarming” in the churn rate.

“In the back half of the quarter, our gross adds and our churn … were back on trends that we had prior to the outage,” Mr. Staffieri said.

Rogers’s cable business was also affected by the outage. The company reported a 4-per-cent decline in cable revenue, partly as a result of the $59-million in outage cable credits, as well as higher promotional costs. The company faced “very aggressive and opportunistic” cable competition from other telecom companies, Mr. Staffieri said.

The hit to Rogers’s net income from its Shaw-acquisition debt came in the form of a $139-million payment on its Shaw senior notes, which it issued earlier this year. Rogers is now facing off against Canada’s Competition Commissioner in a four-week-long hearing before the Competition Tribunal over the proposed $26-billion acquisition.

If the deal doesn’t close by the end of this year, Rogers will be required to pay around $250-million in fees to lenders. It has already paid $520-million in fees to extend the initial Dec. 31 deadline by a year to 2023.

Revenue from the company’s media business increased 12 per cent in the latest quarter. Rogers owns Toronto’s baseball team, the Blue Jays, and the radio and television broadcasting rights for all of its games. The company said the increase came from its sports facility, the Rogers Centre, reaching full audience capacity after several years of pandemic-related shutdowns and limitations.

Manulife core profit hit by declines in wealth & asset management unit

Manulife Financial Corp MNQFF reported a drop in third-quarter profit on Wednesday, as escalating worries of an economic downturn impaired earnings at its wealth and asset management unit.

Manulife’s core earnings in global wealth and asset management sank nearly 2 per cent to $345-million in the third quarter, while net inflows dropped 69 per cent to $3-billion as turbulent markets deterred investors.

A soaring inflation has ravaged the Canadian economy which despite slowing to 6.9 per cent from a peak of 8.1 per cent remains way above the 2 per cent target.

Last month, the Bank of Canada increased its policy rate by half a percentage point to 3.75 per cent, but warned that economic activity would stall from the fourth quarter of 2022 through the first half of 2023.

Manulife, Canada’s largest insurer, reported core earnings of $1.32-billion, or 67 cents a share, in the three months ended Sept. 30, compared with $1.52-billion, or 76 cents a share, a year earlier.

Net income attributed to shareholders was $1.35-billion, or 68 cents per share, compared with $1.59-billion, or 80 cents a share, a year earlier.

Here’s a rundown of tech companies that have announced layoffs in 2022

The job cuts in tech land are piling up, as companies that led the 10-year stock bull market adapt to a new reality.

Days after Twitter’s new boss Elon Musk slashed half his company’s workforce, Facebook parent Meta announced its most significant round of layoffs ever. Meta said on Wednesday that it’s eliminating 13% of its staff, which amounts to more than 11,000 employees.

Last month, Meta announced a second straight quarter of declining revenue and forecast another drop in the fourth quarter. Digital advertisers are cutting back on spending as rising inflation curbs consumer spending, and apps like Facebook are suffering from Apple’s iOS privacy update, which limited ad targeting.

The tech industry broadly has seen a string of layoffs in 2022 in the face of uncertain economic conditions. Here are the big ones that have been announced recently. 

Meta: about 11,000 jobs cut

Meta’s disappointing guidance for the fourth quarter wiped out one-fourth of the company’s market cap and pushed the stock to its lowest since 2016.

The company’s Reality Labs division has lost $9.4 billion so far in this year due to CEO Mark Zuckerberg’s commitment to the metaverse.

Meta is rightsizing after expanding headcount by about 60% during the pandemic. The business has been hurt by competition from rivals such as TikTok, a broad slowdown in online ad spending and challenges from Apple’s iOS changes.

In a letter to employees, Zuckerberg said those losing their jobs will receive 16 weeks of pay plus two additional weeks for every year of service. Meta will cover health insurance for six months.

Twitter: about 3,700 jobs cut

Shortly after closing his $44 billion purchase of Twitter late last month, Musk cut around 3,700 Twitter employees, according to internal communications viewed by CNBC. That’s about half the staff.

In a post on Nov. 4, Musk said there was “no choice” but to lay off employees, adding that they were offered three months of severance.

Musk said the layoffs come as Twitter is losing over $4 million per day. In the second quarter, the last time Twitter reported earnings, revenue fell 1% from a year earlier.

Lyft: around 700 jobs cut 

Lyft announced last week that it cut 13% of its staff, or about 700 jobs. In a letter to employees, CEO Logan Green and President John Zimmer pointed to “a probable recession sometime in the next year” and rising rideshare insurance costs.

For laid-off workers, the ride-hailing company promised 10 weeks of pay, healthcare coverage through the end of April, accelerated equity vesting for the Nov. 20 vesting date and recruiting assistance. Workers who had been there for more than four years will get an extra four weeks of pay, they added.

Stripe: around 1,100 jobs cut

Online payments giant Stripe laid off roughly 14% of its staff, which amounts to about 1,100 employees last week. 

CEO Patrick Collison wrote in a memo to staff that the cuts were necessary amid rising inflation, fears of a looming recession, higher interest rates, energy shocks, tighter investment budgets and sparser startup funding. Taken together, these factors signal “that 2022 represents the beginning of a different economic climate,” he said.

Stripe said it will pay 14 weeks of severance for all departing employees, and more for those with longer tenure. It will also pay the cash equivalent of six months of existing healthcare premiums or healthcare continuation.

Stripe was valued at $95 billion last year, and reportedly lowered its internal valuation to $74 billion in July.

Coinbase: around 1,100 jobs cut

In June, Coinbase announced it cut 18% of full-time jobs, translating to a reduction of around 1,100 people.

Coinbase CEO Brian Armstrong pointed to a possible recession, a need to manage costs and growing “too quickly” during a bull market. 

Coinbase, which held its stock market debut, has lost over 80% of its value this year, cratering alongside cryptocurrencies.

Those laid off received a minimum of 14 weeks of severance plus an additional 2 weeks for every year of employment beyond one year. They also were offered four months of COBRA health insurance in the U.S., and four months of mental health support globally, according to the company’s announcement. 

Shopify: around 1,000 jobs cut

In July, Shopify announced it laid off 1,000 workers, which equals 10% of its global employees. 

In a memo to staff, CEO Tobi Lutke acknowledged he had misjudged how long the pandemic-driven e-commerce boom would last, and said the company is being hit by a broader pullback in online spending. The company’s stock price is down 78% in 2022.

Shopify said employees who are laid off will receive 16 weeks of severance pay, plus one week for every year of tenure at the company.

Netflix: around 450 jobs cut

Netflix announced two rounds of layoffs. In May the streaming service eliminated 150 jobs after Netflix reported its first subscriber loss in a decade. In late June Netflix announced another 300 layoffs. 

In a statement to employees the company said, “While we continue to invest significantly in the business, we made these adjustments so that our costs are growing in line with our slower revenue growth.” 

Netflix’s stock is down 58% this year.

Microsoft: less than 1,000 job cuts reportedly

In October, Microsoft confirmed that it let go of less than 1% of employees. The cuts impacted fewer than 1,000 people, according to an Axios report which cited an unnamed person. 

The announcement came after Microsoft called for the slowest revenue growth in more than five years in the quarter that ended Sept. 30.

Snap: more than 1,000 jobs cut 

In late August, Snap announced it laid off 20% of its workforce, which equates to over 1,000 employees. 

Snap CEO Evan Spiegel told employees in a memo that the company needs to restructure its business to deal with its financial challenges. He said the company’s current year-over-year revenue growth rate for the quarter of 8% “is well below what we were expecting earlier this year.”

Snap has lost 80% of its value this year.

Robinhood: 31% of its staff

Retail brokerage firm Robinhood cut 23% of its staff in August, after slashing 9% of its workforce in April. 

Robinhood CEO Vlad Tenev blamed “deterioration of the macro environment, with inflation at 40-year highs accompanied by a broad crypto market crash.”

The stock is down by more than half in 2022.

Chime: about 160 jobs cut

Earlier this month, Fintech company Chime laid off 12% of its workforce, or about 160 employees. 

A Chime spokesperson told CNBC that the so-called challenger bank – a fintech firm that exclusively offers banking services through websites and smartphone apps – is cutting 12% of its 1,300-person workforce. The company said that while it’s eliminating approximately 160 employees, it’s still hiring for select positions and remains “very well capitalized.”

Private investors valued Chime at $25 billion just over a year ago.

Tesla: cutting 10% of salaried employees

In June, Tesla CEO Elon Musk wrote in an email to all employees that the company is cutting 10% of salaried workers.

“Tesla will be reducing salaried headcount by 10% as we have become overstaffed in many areas,” Musk wrote. “Note this does not apply to anyone actually building cars, battery packs or installing solar. Hourly headcount will increase.”

Canadian staff among 11,000 laid off worldwide by Facebook owner Meta

Facebook owner Meta Platforms Inc. META-Q +7.16%increase began laying off 11,000 people worldwide Wednesday, including in Canada, becoming the latest tech giant to dramatically slash costs after years of rapid growth in the sector.

Meta has found itself in a triple bind this year. It is grappling with a sector-wide slowdown, a rocky rebranding to focus on immersive “metaverse” experiences, and a sharp slowdown in digital advertising, which underpins much of its traditional business. Its profit last quarter fell by more than half year-over-year, to US$4.4-billion, as the average price per ad on its platforms fell 18 per cent.

Chief executive officer Mark Zuckerberg said in a post that the layoffs amounted to 13 per cent of Meta’s staff, calling the cuts “a last resort” as the company cut discretionary spending and extended a hiring freeze into its next fiscal year. Like many tech executives in recent months, including Shopify Inc. CEO Tobias Lutke, Mr. Zuckerberg acknowledged that he was wrong in planning for a future in which the frenzied pandemic rush into e-commerce would be sustained.

“I got this wrong,” Mr. Zuckerberg wrote, later adding: “We’re restructuring teams to increase our efficiency. But these measures alone won’t bring our expenses in line with our revenue growth, so I’ve also made the hard decision to let people go.”

The news comes just months after Meta and other massive U.S. technology companies were bidding up the price of Canadian tech talent, sending salaries up as much as 30 per cent year-over-year in tech companies of all sizes across the country. In late March 2022, Meta said it would hire an additional 2,500 staff in Canada over five years – many of them remote positions, though the company also announced a new engineering hub in Toronto.

Ontario Premier Doug Ford praised the March job announcement, calling it an opportunity to “demonstrate that our tech talent no longer has to look elsewhere to pursue their careers.”

Meta owns the original Facebook platform, Instagram and WhatsApp, and last year began an extensive, controversial rebrand to focus on 3-D immersive experiences to bring people together in what it calls the “metaverse.” A LinkedIn analysis suggests Meta has at least 1,100 staff in Canada.

Meta’s Canadian office declined to say how many Canadians would be affected by Wednesday’s cuts, but numerous Canadian staff began announcing their own layoffs by mid-morning.

Mitchell Steiman, who was hired at Meta in July as a client partner for emerging brands on Facebook and Instagram, said he was impacted by the layoffs. “It was everything that I could have hoped for in a role, and more. I will miss the people and culture there immensely,” he wrote on LinkedIn Wednesday about his former position at Meta, which was based in the Greater Toronto Area.

“In my small team, 9 out 10 teammates were laid off,” said Lois Wang, a technical recruiter at Meta based in Toronto, writing on LinkedIn that she had been there for just under a year before what she called the “massive” layoffs that particularly affected the company’s recruiting teams.

“In Q3 2022, my performance metrics of onsite interview ranked top 2 among whole 37 teammates in Meta East Coast sourcing team,” she said. “I believe that being optimistic and hopeful is the best way to get through a tough time like this.”

Across Canada, high-profile companies including e-commerce platform Shopify Inc. SHOP-T -5.15%decrease, investment firm Wealthsimple Technologies Inc. and social-media management company Hootsuite Inc. have all shed hundreds of staff in recent months. Last week, Twitter Inc.’s new owner Elon Musk began a 50-per-cent cut of the social network’s staff, which included numerous Canadians, as he began drastically retooling the notoriously unprofitable company.

The sector had experienced unbridled growth since the Great Recession ushered in more than a dozen years of low interest rates, fostering a digital economy that hinged on social platforms and mobile computing. But macro factors such as the COVID-19 pandemic, war in Ukraine and their twinned supply-chain constraints have altered global dynamics.

It’s been nearly a year since public markets began turning against the sector as inflation worries turned into fears of rising interest rates and cut into tech valuations. Those fears were confirmed by this past March, as central bankers began jacking up rates. Tech companies big and small began slashing costs – and jobs – as a result.

More to come

Surprisingly close U.S. midterms keep investors on edge: What market observers are saying

Investors on Wednesday are grappling with an unclear outcome in the U.S. midterm elections, as a better-than-expected showing by Democrats muddies the outlook for issues such as fiscal spending and regulation although some form of divided government seen as good for stocks could still shape up.

Control of Congress was still up for grabs early on Wednesday, with several pivotal races uncalled. The prospects of a Republican “red wave” had evaporated although in the House of Representatives, Republicans remained favored to win a majority.

U.S. stock indexes opened lower as uncertainty around the vote results weighed on the mood, with investors focus shifting to Thursday’s important October Consumer Price Index report. The U.S. dollar was steady.

With Democrat Joe Biden in the White House, Republicans taking the House would lead to a split government, an outcome that has been accompanied by positive long-term stock market performance in the past.

Here’s what observers are saying:

ALEC PHILLIPS, ECONOMICS RESEARCH, GOLDMAN SACHS

“While Democrats outperformed expectations and Democratic Senate control would be a surprise, the end result nevertheless appears to be divided government and the policy implications are broadly similar to what would have been expected with Republican majorities in both chambers.”

“Senate control matters much less if Republicans have won the House majority. There are two general differences between a divided Congress and a Republican Congress. First, the Senate confirms presidential nominations with a simple majority, so continued Democratic control would limit Republican influence on President Biden’s nominations over the next two years. Second, passing legislation in a divided Congress would be harder than in a Republican Congress, though in either scenario bipartisan support would be needed (as President Biden could veto in either scenario, and Republicans would lack the 2/3 vote to override) so the amount of legislative activity could be similar.”

“Under a Republican House and Democratic Senate in 2011 and 2013, debt limit uncertainty disrupted financial markets and led to substantial spending cuts. A similar scenario could play out next year, though a Democratic Senate would make it less likely that a debt limit deal would involve spending cuts of the sort enacted in 2011. A legislative response to a potential recession would also be more difficult.”

FLORIAN IELPO, PORTFOLIO MANAGER, LOMBARD ODIER ASSET MANAGEMENT

“The perspective of that inflation number overshadows everything else, inclusive of the U.S. political situation. We need lower inflation to keep our eyes off the Fed and start looking elsewhere.”

MICHAEL HEWSON, CHIEF MARKETS STRATEGIST, CMC MARKETS, LONDON

“If the Republicans can get a blocking in one of the Houses, then ultimately, that could be less inflationary, because it will mean the Democrats won’t be able to spend nearly as much money, so in terms of yields, that could be a good thing.

“It’s potentially also positive for stock markets and probably why we’ve seen a weaker dollar, but obviously, the main focus remains on tomorrow’s CPI numbers and particularly the core number.”

FIONA CINCOTTA, SENIOR MARKETS ANALYST AT CITY INDEX, LONDON.

“It does look like it’s a bit tighter than expected. The expectation is still for the Republicans to flip the House of Representatives.

“We see a gridlocked Washington as a dollar negative. Any spending measures being kept in check could bring inflation down and potentially we could see less aggressive moves from the Fed (U.S. Federal Reserve).”

STUART COLE, HEAD MACRO ECONOMIST, EQUITI CAPITAL, LONDON

“The midterms do not seem to have gone quite so well for the Republican Party as had been forecast, but even though they look like making smaller gains, it still appears that they will do well enough to take control of at least the House and that alone suggests political gridlock going forward.

“This will almost certainly be the end of the tax rises the Biden administration had been talking about imposing on U.S. corporations and the well-off. It also means the end of the loose fiscal policy Biden had been pursuing. This is particularly important, as it removes a source of stimulus from the economy and makes the job of the Fed in getting inflation back under control that little bit easier, to the extent that it may allow for a lower terminal rate.

“But looming larger now is the prospect of another battle over raising the US debt ceiling and the prospect for Government shutdowns while the Democrats and Republicans argue over it.

“For the markets, a grid-locked administration should be positive for equities, given that it makes the Fed’s task that little bit easier.”

DANNI HEWSON, FINANCIAL ANALYST, AJ BELL, LONDON:

“The fact that we didn’t see a Republican landslide as a lot of people had expected does now raise questions about whether or not the Democrats will maintain control of the Senate. You’re in a slightly different situation and it does look like the Biden Presidency has not been dealt a massive blow by these midterm elections, so the markets are in a wait-and-see mode.”

CHARU CHANANA, MARKET STRATEGIST, SAXO MARKETS, SINGAPORE

“The race seems to be closer than expected, especially for the Senate. If Democrats take the Senate, it will be a huge embarrassment for Republicans even if (they) take the House.

“U.S. index futures have turned negative, and I think (the) dollar could turn back higher if Democrats retain the Senate.”

GARRETT MELSON, PORTFOLIO STRATEGIST, NATIXIS INVESTMENT MANAGERS SOLUTIONS

“The likely result (of the election) is gridlock in some shape or form. Divided government reduces the likelihood of significant legislative changes, thereby reducing policy uncertainty – a positive for risk assets.

“Looking into mid-late 2023 we may see delayed effects of the election as the budget and debt ceiling debate come into focus. Should Republicans take one or both chambers of Congress expect a potentially contentious bout of political brinksmanship that could contribute to some market volatility in 2023 before an eventual resolution is reached.”

QUINCY KROSBY, CHIEF GLOBAL STRATEGIST AT LPL FINANCIAL, CHARLOTTE, NORTH CAROLINA

“Some of the key races are quite close. It’s going to take some time to see who wins but it is surprising … We already have a scenario of gridlock because the Republicans are going to take the House. The market can accept gridlock. It means that many of the measures from the administration will be thwarted by the opposing part.

“That said, if the Republicans take the Senate along with the House that provides a pro-business backdrop for the market.”

RANDY FREDERICK, VICE PRESIDENT OF TRADING AND DERIVATIVES, CHARLES SCHWAB, AUSTIN, TEXAS

“Obviously we don’t have a 100% reporting in on anything yet, but it doesn’t look like anything we have seen so far has spooked markets at all.”

ASH ALANKAR, HEAD OF GLOBAL ASSET ALLOCATION AT JANUS HENDERSON INVESTORS

“On one end, the reduced likelihood of corporate and personal and capital gain tax increases, that come with a Republican win, will be a tailwind for all equities … however on the other end, the prospects of no tax increases and extension of Trump’s tax cuts all potentially are inflationary as the private sector has more disposable after tax income.

“A Republican win will in generally be positive for equities, but inflationary risk is unlikely to be mitigated nor accelerated.”

TROY GAYESKI, CHIEF MARKET STRATEGIST, FS INVESTMENTS, NEW YORK

“In the chance that both the House and Senate flip, it could lead to a miniature kind of sideways slash bear market rally, but ultimately, Fed tightening, money supply contraction and inevitable recession will dominate the changing political landscape in the U.S.

“When you think of the order of importance to markets, it’s really the Fed, the economy, the very troubling situation overseas and the midterms they’re just not terribly relevant over the next 6, 12, 18 months, because they’re really almost a non-event.

“If the Congress flips, it could be perceived as good news by investors because it means fiscal stimulus is over and that on the margin could make the Fed’s job a little bit easier to break inflation.”

JJ KINAHAN, CEO, IG NORTH AMERICA, CHICAGO

“Having a balanced ticket in terms of Republicans, if they get the House and Senate, or just the House, will help slow some of the government spending which many have seen as one of the major contributors to inflation. So that happening may help do some of Fed’s work for them, so to speak, and that’s why that would be viewed favorably by the market.”

BROOKS RITCHEY, CO-CIO, K2 ADVISORS

“If we get a split Congress, we might have to adjust our portfolios to be less defensive than we are today.”

IPEK OZKARDESKAYA, SENIOR ANALYST, SWISSQUOTE BANK

“From an investor point of view, a Republican win in both chambers is a good outcome for the stocks. And even a divided government, which we will sure get, is better for the stocks than a Democratic win.”

JACK ABLIN, CHIEF INVESTMENT OFFICER, CRESSET CAPITAL, CHICAGO

“I think the markets are rallying at the prospect of gridlock.”

“Fiscal spending has created a challenge for central banks worldwide. The prospect of no legislation is a bullish inflation signal.”

Consulting firm CGI reports fourth-quarter profit and revenue up from year ago

CGI Inc. GIB-A-T +0.24%increase says it earned a fourth-quarter profit of $362.4-million, up from $345.9-million in the same quarter last year as its revenue rose eight per cent compared with a year ago.

The business and technology consulting firm says the profit amounted to $1.51 per diluted share for the quarter ended Sept. 30, up from a profit of $1.39 per diluted share in the same quarter last year.

Revenue for the three-month period totalled $3.25-billion, up from $3.01-billion a year earlier.

The company says its revenue was up 13.9 per cent compared with a year ago, when excluding $177.9-million of unfavourable foreign currency impact.

Excluding specific items, CGI says it earned $1.56 per diluted share in its latest quarter, up from $1.40 per diluted share in its fourth quarter last year.

Analysts on average had expected a profit of $1.55 per share and nearly $3.21-billion in revenue, according to estimates compiled by financial markets data firm Refinitiv.

BMO to take billion-dollar charge after losing Ponzi lawsuit in U.S.

A jury in a Minnesota bankruptcy court has found the U.S. arm of Bank of Montreal BMO-T -1.16%decrease liable for US$564-million in damages in a lawsuit related to one of the largest Ponzi schemes in history, and the bank will take a $1.1-billion charge as it prepares to appeal the decision.

In a verdict reached on Tuesday, the jury held BMO Harris Bank N.A. – the U.S. subsidiary of BMO – liable for “aiding and abetting breach of fiduciary duty,” according to a court filing.

It awarded US$484-million in compensatory damages as well as nearly US$80-million in punitive damages in favour of the trustee in bankruptcy proceedings for companies controlled by Thomas Joseph Petters, who was convicted in 2008 of leading a nearly $2-billion fraud and was a client of a bank later acquired by BMO.

The trustee is trying to recover money for victims of the fraud. The compensatory damages were about one quarter of the US$1.9-billion that the trustee had sought.

BMO’s $1.1-billion charge includes the interest payments it may have to pay on the judgment. The exact amount will be decided later by a judge.

The jury found BMO was not liable on three other counts that included alleged violations related to fiduciary duties, as well as aiding and abetting fraud.

BMO said in a written statement that it is disappointed with the ruling, “which is not supported by the evidence or the law,” and the bank “intends to pursue all available legal options including appealing the jury verdict and award.” The bank also said that according to the terms of a prior settlement in another Petters-related case, “BMO Harris is entitled to recover approximately 21 per cent of any amount that it pays to the trustee.”

“We are confident that we have strong grounds for appeal,” the statement said.

The lawsuit began in 2012 and alleged that Milwaukee-based Marshall and Ilsley Bank, which BMO acquired in 2011, and a predecessor bank facilitated a Ponzi scheme run by Mr. Petters between 1999 and 2008. Mr. Petters was revealed to have been running a US$1.9-billion fraud over a 15-year span – at the time, the largest Ponzi scheme in history, but later surpassed by a fraud led by Bernie Madoff. Mr. Petters was convicted and sentenced to 50 years in federal prison.

As plaintiff in the lawsuit, the trustee argued that M&I facilitated the Ponzi scheme, standing by as Mr. Petters moved tens of millions of dollars in and out of his corporate and personal accounts. The pattern of money movement was wholly inconsistent with what M&I understood to be the business model of Mr. Petters’s companies, the trustee alleged in the lawsuit.

Michael Collyard, a lawyer at Robins Kaplan LLP acting for the trustee, said it will also seek prejudgment interest that could bring the total award to more than US$1-billion if its arguments are successful. Mr. Collyard intends to seek 10-per-cent annual interest, which he says is allowed by Minnesota law.

As a result, BMO will record a provision of $1.12-billion that includes possible prejudgment interest as well as potential recoveries, which will result in an after-tax charge of $830-million to be recorded when the bank releases its fiscal fourth-quarter financial results this month.

“We are extremely pleased with the jury’s decision to hold BMO Harris Bank accountable for its role,” Mr. Collyard said in an e-mailed statement. “This is a fantastic result for the trust pursuing recovery for the people who lost money in this fraud.”

Mr. Collyard also said he believes the award is the largest in a civil case in Minnesota’s history.

BMO went to trial last month after getting sanctioned by a judge for intentionally destroying and failing to preserve evidence.

Judge Kathleen Sanberg ruled in July, 2019, that M&I destroyed computer backup tapes in 2010 and 2011 that likely contained documents and memos sent between its bankers and Mr. Petters. In 2014, BMO Harris Bank employees found some tapes that might have contained evidence – but then falsely told the court all tapes were gone, according to the judge.

BMO Harris Bank, the judge ruled, “has failed to be candid and has fought discovery at every step … has lied to this court and has attempted to hide evidence on several occasions.”

Her ruling allowed the jury to hear about the evidence destruction.

China’s trade unexpectedly shrinks in October as COVID-19 curbs, global slowdown jolt demand

China’s exports and imports unexpectedly contracted in October, the first simultaneous slump since May 2020, as a perfect storm of COVID-19 curbs at home and global recession risks dented demand and further darkened the outlook for a struggling economy.

The bleak data highlight the challenge for policy-makers in China as they press on with pandemic prevention measures and try to navigate broad pressure from surging inflation, sweeping increases in worldwide interest rates and a global slowdown.

Outbound shipments in October shrank 0.3 per cent from a year earlier, a sharp turnaround from a 5.7 per cent gain in September, official data showed on Monday, and well below analysts’ expectations for a 4.3 per cent increase. It was the worst performance since May 2020.

The data suggest demand remains frail overall, and analysts warn of further gloom for exporters over the coming quarters, heaping more pressure on the country’s manufacturing sector and the world’s second-biggest economy grappling with persistent COVID-19 curbs and protracted property weakness.

Chinese exporters weren’t even able to capitalize on a prolonged weakening in the yuan currency since April and the key year-end shopping season, underlining the broadening strains for consumers and businesses worldwide.

The yuan on Monday eased 0.4 per cent from a more than one-week high against the dollar reached in the previous session, as the weak trade data and Beijing’s vow to continue with its strict zero-COVID strategy hurt sentiment.

“The weak export growth likely reflects both poor external demand as well as the supply disruptions due to COVID outbreaks,” said Zhiwei Zhang, chief economist at Pinpoint Asset Management, citing COVID-19 disruptions at a Foxconn factory, a major Apple supplier, as one example.

Apple Inc said it expects lower-than-anticipated shipments of high-end iPhone 14 models following a key production cut at the virus-blighted Zhengzhou plant.

“Looking forward, we think exports will fall further over the coming quarters … We think that aggressive financial tightening and the drag on real incomes from high inflation will push the global economy into a recession next year,” said Zichun Huang, economist at Capital Economics.

Growth of auto exports in terms of volume also slowed sharply to 60 per cent year-on-year from 106 per cent in September, according to Reuters calculations based on customs data, reflecting a transition from demand for goods to services in major economies.

Overall exports to China’s major markets of the United States and European Union also slumped in October, off 12.6 per cent and 9 per cent year-on-year, respectively.

Almost three years into the pandemic, China has stuck to a strict COVID-19 containment policy that has exacted a heavy economic toll and caused widespread frustration and fatigue.

Feeble October factory and trade figures suggested the economy is struggling to get out of the mire in the last quarter of 2022, after it reported a faster-than-anticipated rebound in the third quarter.

The Ukraine war, which sparked a surge in already high inflation globally, has added to geopolitical tensions and further dampened business activity.

Chinese policy-makers pledged last week to prioritize economic growth and press on with reforms, easing fears that ideology could take precedence as President Xi Jinping began a new leadership term and disruptive lockdowns continued with no clear exit strategy in sight.

Tepid domestic demand, partly weighed down by fresh COVID-19 curbs and lockdowns in October, hurt importers.

Inbound shipments declined 0.7 per cent from a 0.3 per cent gain in September, below a forecast 0.1 per cent increase, marking the weakest outcome since August 2020.

The harsh impact on demand from strict pandemic measures and a property slump was also highlighted in a broad range of Chinese imports; purchases of soybeans declined to eight-year-lows last month while copper imports fell and coal imports slackened after hitting a 10-month high in September.

On top of the global slowdown, frail domestic consumption will put more strain on China’s economy for a while yet, analysts say.

“Insufficient domestic demand is the main constraint on China’s short-term recovery and long-term growth trajectory,” said Bruce Pang, chief economist at Jones Lang Lasalle.

China’s crude oil imports in October rebound amid new refinery rollouts

China’s crude oil imports in October rebounded to the highest level since May, up 14 per cent from a low base a year earlier in their first annual growth in five months, data showed on Monday, as two greenfield refineries prepared to start operations.

The world’s largest crude importer brought in 43.14 million tonnes of crude oil last month, equivalent to 10.16 million barrels per day (bpd), according to data from the General Administration of Customs.

The October imports were up from September’s 9.8 million bpd.

The rebound came as PetroChina started trial production at a 200,000-barrel-per-day crude unit at its newly-built refinery in Guangdong, while privately controlled Shenghong Petrochemical also got ready to officially launch its 320,000-bpd plant in Jiangsu province.

Refiners also took advantage of a slide in global crude prices to replenish stocks, hauling in cargoes from the Americas and the Middle East.

Imports for the first 10 months of the year totalled 413.53 million tonnes, or about 9.93 million bpd, 2.7 per cent below the corresponding period last year.

Spurred by Beijing’s abrupt release of a large number of export quotas, companies shipped overseas 4.456 million tonnes of refined fuel last month, up 13 per cent from a year before, data showed.

However, year-to-date exports remained 24.5 per cent below year-earlier levels at 39.91 million tonnes, due to a broad curb on fuel exports earlier in the year.

Natural gas imports last month via pipelines and as liquefied natural gas (LNG) sank to the lowest level in two years at 7.61 million tonnes, after a brief spike the previous month ahead of the winter heating season.

Year-to-date imports remained 10.4 per cent lower than a year earlier at 88.73 million tonnes, because of steep declines in LNG imports as companies slashed costly spot purchases.

While predicting slower demand growth this winter, national energy firms prioritized domestic production and boosted imports of pipeline gas from Russia and Central Asia.