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Israel wages war of semantics over West Bank ‘Area C’


Jerusalem (AFP) – To the United Nations, “Area C” is Palestinian land in the occupied West Bank. But Israel, which aims to annex parts of the territory, is waging a war of semantics over its status.

Pro-Israel NGOs and more recently a government agency are using email and social media to take aim at foreign media about their “biased” grammar when describing the Israeli-Palestinian conflict.

But rather than trying to impose the biblical “Judea and Samaria” term used by Israel for the West Bank, the reproaches focus on the Oslo peace accords of the 1990s.

As part of these interim Israeli-Palestinian agreements, the West Bank was divided into Areas A, B and C. The first two zones constitute around 40 percent of the territory and were due to be largely under Palestinian jurisdiction.

Area C was to remain under full Israeli control, with the intention of Israel transferring part of the zone to the Palestinians under a final agreement.

But peace talks collapsed and Israel now intends to annex its settlements and the Jordan Valley — which lie in Area C — and could set such plans in motion from July 1.

Annexation forms part of a broader US peace plan unveiled in January, which paves the way for the eventual creation of a Palestinian state in the remaining territory.

Currently more than 450,000 Israeli settlers live in the West Bank, alongside more than 2.8 million Palestinians.

Washington is now proposing a 50-50 split of Area C, separating around 300,000 Palestinians who live there from the settlers whose homes would become part of Israel.

Yossi Beilin, one of the Israeli negotiators of the Oslo accords, said that Area C was intended to become “part of Palestine” in a final deal.

Viewing Area C now as Israeli territory “abuses the Oslo agreement”, he told AFP, by turning something “interim” into something “forever”.

Beilin said the Israeli right believes they are being “very generous” in proposing to divide the area in two.

“They don’t understand why the world is against it,” said Beilin, who has served as a minister for the left-wing Labor party.

– ‘Disputed’ land? –

The West Bank was ruled by Jordan following the 1948 Arab-Israeli War and Amman later annexed the territory, in a move never recognised by the international community.

Israel drove out Jordanian forces in the 1967 Six-Day War and sees the land as “disputed”, opposing the term “occupied”, which is widely used in international media.

An Israeli government official recently told a European correspondent to abandon the phrase “occupied Palestinian territory”.

Foreign media including AFP describe Areas A, B and C as Palestinian territories, referring to the region as the “occupied West Bank”.

The United Nations special envoy, Nickolay Mladenov, clarified to AFP that Area C is “considered occupied Palestinian territory”.

But efforts by an Israeli government department to seek out journalists on social media — telling them to scrap the term — have escalated in recent weeks.

“I believe this public nitpicking on Twitter is a new phenomenon,” said Glenys Sugarman, former director of Israel’s Foreign Press Association.

“I handed over the FPA towards the end of last year — I was not aware of anything like this by the GPO,” she said, referring to Israel’s Government Press Office.

The GPO, which is linked to the prime minister’s office, acknowledged “occasional engagements with incorrect/inaccurate/biased reports in the media”.

The government department stressed, however, that it was not “the GPO’s role” to clarify Area C terminology ahead of Israel’s possible annexation.



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Big banks able to weather Bank of Canada’s worst-case scenario, but risks higher for households and businesses


Canada’s six biggest banks survived a severe stress test by the Bank of Canada, which is a relief since they might be the only thing standing between a relatively short recession and something much worse.

The analysis was part of the central bank’s latest Financial System Review (FSR), which is devoted to the COVID-19 crisis.

Generally speaking, the central bank appears confident that its historic response to the shutdown of vast swaths of the global economy has averted disaster. Governor Stephen Poloz stuck to his contention that the recession will be brutal, but probably relatively short, in part because there appears to be little reason to worry about a financial meltdown.

The pandemic remains a massive economic and financial challenge, possibly the largest of our lifetimes, and it will leave higher levels of debt in its wake

Bank of Canada Governor Stephen Poloz

“The country’s banking system and financial market infrastructures are strong enough to deal with the situation,” Poloz said before taking questions on a conference call with reporters. “To be clear, the pandemic remains a massive economic and financial challenge, possibly the largest of our lifetimes, and it will leave higher levels of debt in its wake.”

Still, thanks to decent economic growth during the past few years and the hundreds of billions of dollars in emergency funds that Ottawa is pushing into the economy, the governor said he was “confident that a strong financial system will help Canada emerge from this episode in relatively good shape.”

Unlike many of its peers, Canada’s central bank doesn’t have any regulatory authority over financial institutions. But it does have moral authority, and it wields the country’s most impressive array of economic researchers. Thus, the FSR is an important instrument of policy, since central bankers use it to try to guide behaviour, just as they attempt to steer spending habits by raising and lowering interest rates.

Normally, the annual FSR is a warning mechanism. The Bank of Canada flags vulnerabilities it thinks could lead to pain in the event of a shock. Since we’re currently living through such a shock, this year’s review was more of a “state of play,” as Toronto-Dominion Bank economist Brian DePratto observed. “Vulnerabilities abound, but on balance the bank appears to be cautiously optimistic that the system can handle the current and emerging stresses,” he said in a note to his clients.

The Big Six and the hefty cash reserves they must maintain to satisfy federal regulations are a firebreak in this crisis

Policy-makers are confident that they have avoided a credit crunch, albeit only because they took the unprecedented step of creating tens of billions of dollars to buy government bonds and company debt. The policy seems to be working, since interest rates, which spiked in March as investors retreated when the coronavirus spread through Europe and North America, have returned to pre-crisis levels.

Poloz and the central bank’s other leaders are probably less sure about how many companies and households will survive the recession without declaring bankruptcy.

The central bank reckons about twenty per cent of mortgage borrowers entered the downturn with only enough cash and other liquid assets to cover two months (or less) of loan payments. Many companies are equally fragile, as some of the industries hardest hit by the crisis are also the ones in which companies were already operating with relatively little money in the bank.

“COVID‑19 has hit many households and businesses hard, especially those that are highly indebted or have low cash buffers,” the FSR said. “During this period, emergency measures that provide basic incomes to households and help businesses access credit are crucial.”

Government rescue efforts now exceed 10 per cent of gross domestic product, more than double the value of the fiscal stimulus deployed during the Great Recession a decade ago. Much of the assistance is in the form of emergency loans, and most of that funding is being administered by the biggest banks.

Canada’s banking oligopoly constrains competition and innovation in good times. But the Big Six and the hefty cash reserves they must maintain to satisfy federal regulations are a firebreak in this crisis. Things would be much worse if the banks were as fragile as airlines and oil companies. Fortunately, the banks should be able to withstand a deterioration of current conditions.

Policy-makers ran a simulation of what would happen to the six biggest banks — Royal Bank of Canada, Toronto-Dominion Bank, Bank of Nova Scotia, Bank of Montreal, Canadian Imperial Bank of Commerce and National Bank — if the Bank of Canada’s worst-case economic outlook came to pass.

That scenario, which the central bank acknowledges is plausible, involves a 30 per cent plunge in GDP in the second quarter from the end of 2019 and a slow recovery that would leave economic output below pre-crisis levels for more than two years.

It’s ugly, but the banks survived the test: arrears peaked at a rate that was about double the peak during the financial crisis, and non-performing loans would exceed recent highs. But monetary and fiscal policy counter much of the pain, and the banks’ reserves do the rest. Capital requirements remain above the level required by regulation, which was made tougher after the Great Recession precisely so the most important lenders would be ready for the next economic calamity.

“The six largest banks entered the COVID‑19 period with strong capital and liquidity buffers, a diversified asset base, the capacity to generate income and the protection of a robust mortgage insurance system,” the FSR said. “With these strengths, as well as the aggressive government policy response to the pandemic, the largest banks are in a good position to manage the consequences.”

Financial Post

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B.C. notaries say first-time home buyers relying on bank of mom and dad


However, only eight per cent of first-time-buyer clients got more than half of their down payments from parents, compared with 19 per cent in 2015.

“While more first-time buyers are getting financial help, they appear to be getting a lower proportion of their down payment over the last four years,” the report states.

Fifty-nine per cent of notaries said their clients typically get less than 25 per cent of the down payment, while a third said their clients typically got between 25-50 per cent of their down payment.

The survey, released Monday, found 74 per cent of notaries thought house prices were an issue in their communities. Only notaries in northern B.C. and the Okanagan indicated “house prices were not an issue in their community.”

Notaries also reported increased mortgage restrictions and lack of supply were making it harder for first-time buyers than in previous years.

In the Fraser Valley, notaries reported more first-timers were buying strata units compared with other years.

Northern B.C. was the standout in the report, with 40 per cent of notaries saying there had been an increase in first-time-owner activity — provincially it was reported to be flat. This was attributed to resource sector growth. The multibillion-dollar Site C dam and LNG Canada projects are underway in northern B.C.

Northern B.C. is also expected to be one of the few areas in the province that will see climbs in assessed values when the 2020 assessment roll is released Jan. 1, 2020.

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New European Central Bank chief holds her first rate meeting


FRANKFURT, Germany (AP) — Newly appointed European Central Bank head Christine Lagarde makes her first official assessment Thursday of the mixed bag that is the eurozone economy, which suffers from slowing manufacturing and global trade even as consumer spending helps prop up growth.

Analysts think Lagarde will stress that the economy still needs support from the central bank, and that policymakers must be their guard against things turning out worse than expected. The ECB, however, is not expected to announce changes to a stimulus package decided Sept. 12 before Lagarde succeeded Mario Draghi on Nov. 1.

Doubts have grown about how much good additional central bank action can do to support developed economies; the U.S. Federal Reserve on Wednesday kept interest rates unchanged and signaled it would leave them alone through 2020.

Instead, interest is focused on Lagarde, who is presiding over her first meeting since she was appointed by European leaders as the head of the institution that sets monetary policy for the 19 euro countries that use the euro and their 342 million people. She is well known from her previous jobs as head of the International Monetary Fund and as French finance minister but investors will want to see how she communicates and explains the complexities of monetary policy to markets and voters.

Other themes that may come to the fore at her news conference are her plans for a review of the bank’s monetary policy framework and how it defines price stability, the goal it is supposed to seek under the European Union treaty. There’s also been discussion of whether the ECB should do more to support financing of projects aimed at fighting environmental pollution and climate change.

Analysts will also look for signals on how she will manage dissent on the ECB’s 25-member governing council. A minority criticized the measures enacted under predecessor Draghi on Sept. 12. Those included a cut in the deposit rate to minus 0.5% from minus 0.4%. The rate is charged on excess cash left at the central bank overnight by commercial banks, so the negative rate is in effect a penalty that aims to push banks to lend the money to companies. The bank also started 20 billion euros ($22 billion) in monthly purchases of government and corporate bonds.



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Bank of Montreal hikes dividend but takes hit for job cuts


The chief executive of the Bank of Montreal vowed Tuesday that there will be “ongoing accountability” in the wake of another restructuring charge that the Canadian lender was forced to take in connection with job cuts.

BMO reported on Tuesday net income of nearly $1.2 billion for the three months ended Oct. 31, down from about $1.7 billion a year earlier, due in part to a $484-million pre-tax restructuring charge that Canada’s fourth-largest lender took for the quarter.

The fourth-quarter charge was tied to severance and some small real estate-related costs, BMO said, “to continue to improve our efficiency, including accelerating delivery against key bank-wide initiatives focused on digitization, organizational redesign and simplification of the way we do business.”

BMO CEO Darryl White told analysts during a conference call that the decision was made “with serious consideration,” and was in line with its strategy.

“All areas of the bank contributed to the charge, and there will be ongoing accountability throughout the organization for the decisions that have been made,” White said.

BMO’s chief financial officer, Tom Flynn, said the restructuring charge would affect around five per cent of the bank’s employees. He added that they expect their measures to create savings of approximately $200 million in its fiscal 2020 and to achieve run-rate savings of about $375 million by the first quarter of fiscal 2021.

The comments came after the Toronto-based bank also reported it had cut the number of full-time equivalent employees by 810 from the previous quarter, to 45,513 total for the period ending Oct. 31.

However, the restructuring costs have been a recurring theme for BMO, which recorded similar charges in recent years, including hits of $260 million in 2018 and $59 million in 2017. There was also a $120-million severance expense for the second quarter of 2019, which was attributed to the bank’s capital-markets unit.

“It is difficult for us to credit good expense control in the face of yet another restructuring charge from this bank, this time approaching $500 million,” CIBC World Markets analyst Robert Sedran wrote in a note. “However, the underlying segment performance was solid with improving volume growth, positive operating leverage, and stable credit quality. A decent result.”

White, though, suggested that the restructuring costs could be coming to an end.

One of BMO’s key targets has to do with what is known as its efficiency ratio, which is a percentage calculated as non-interest expense divided by total revenue. BMO’s adjusted efficiency ratio was 60 per cent for the quarter, down from 62.2 per cent a year ago, but the bank has set the goal of achieving 58 per cent by 2021.

White said that the latest charge would help BMO in reaching its efficiency target, “while continuing to optimize efficiency beyond that without the need for additional charges.”

In response to an analyst question, the CEO noted it was a “sizable move” affecting five per cent of the bank’s workforce, that the bank was “holding the line a lot more tightly” on expense growth and that the discipline they expect from managers going forward does not include a “reliance on this technique and the assist of a charge.”

“And so that’s a very sort of clear message to the entire organization in terms of how we expect to manage ourselves going forward,” White said. “So when I put all those together, in addition to the real benefits that we’re starting to see from technology and digitization, we’re confident in telling you that we’ll retire this play from our playbook.”

Affecting BMO’s latest results as well were some acquisition-related assets and costs and a $25-million reinsurance “adjustment” connected to the impact of claims from Japanese typhoons, which hit the bank after its previously announced decision to wind down the reinsurance business.

With the latest restructuring charge removed, BMO’s profit for the quarter was $1.6 billion, up five per cent from the same three months of 2018. Adjusted earnings per share were $2.43, an increase of five per cent and slightly above the $2.41 that analysts were expecting.

The bank said its results were boosted by good showings from its retail businesses and greater earnings out of its wealth management unit, offset somewhat by a drop in net income from its capital-markets operations. The previous year’s results also included a “favourable tax item” in the U.S.

BMO’s stock price fell Tuesday morning, and was around 2.5 per cent lower as of 10 a.m., at $98.22.

“We do not expect the slight beat to drive the stock; however, the news on the restructuring charge is likely to drive some near term upside in BMO shares given our expectation that management will suggest that this restructuring positions the bank well to deliver on its 58 per cent efficiency ratio target for 2021,” Eight Capital analyst Steve Theriault wrote.

For its fiscal 2019, which wrapped up at the end of October, BMO reported earnings of almost $5.8 billion, up six per cent from the previous year.

In addition to the earnings, BMO announced it was hiking its quarterly dividend payment by three cents to $1.06 per common share.

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