When a $2.4-billion bank went bust, investors didn’t even know what to do
A $2-billion financial institution went bankrupt in Canada on the same day as a Canadian dollar bill was dropped off at a bank branch.
The Bank of Nova Scotia has reported a $3.4 billion loss, with the company’s stock trading at a discount of nearly 5 per cent.
“It’s hard to imagine anything else could have happened.
We are still in shock,” said CEO and founder Steve Dallaire, who was recently diagnosed with Alzheimer’s disease.
The bank had more than $3-billion in assets and about 1,400 employees.
The company was one of the world’s largest in terms of market capitalization when it was founded in 1993.
Its Canadian operations were the first to suffer the impact of the global financial crisis, when the U.S. Federal Reserve said it was unlikely to cut rates until the economy improved.
But the company survived the collapse of its former parent company, Canadian Imperial Bank of Commerce, and was spun off in 2011.
Dallaire said his goal is to keep Nova Scotia’s assets and assets management up and running as quickly as possible.
“I think the focus now is to try to figure out how to make sure the bank will be in good shape for the long term,” he said.
But even after the bank was rescued, investors weren’t able to tell the difference between the bank and other institutions.
“There are a lot of institutions out there that are doing pretty well, but it’s not always clear who’s a bank,” said Dan McArthur, a senior analyst at Toronto-Dominion Bank.
“People are still looking for answers to that question.”