Industry veteran Fred Pye set to launch Canada’s first crypto-currency fund

It’s a matter on which seemingly everybody has an opinion — and those opinions are diverse.

Jamie Dimon, head of JP Morgan Chase, the world’s largest non-Asian bank by assets, has called crypto-currencies a fraud and noted that if people are “stupid enough to buy it,” they will pay the price for it “in the future.”

Recently, Dimon termed the various digital currencies a “novelty” and claimed they are “worth nothing,” a comment that drew a swift rebuke from the founder of BitOasis, the Middle East’s largest crypto-currency. Given that crypto-currencies are here to stay, Dimon needs to get educated before making such statements, the founder said.

But Mark Cuban, owner of the Dallas Mavericks, who is not convinced bitcoin will be a “revolutionary asset,” seems to have had a slight change of heart. Last week he said that “if you’re a true adventurer,” and really want to throw the “Hail Mary, invest 10 per cent of your savings in bitcoin or ethereum.”

One week back, Christine Lagarde, head of the IMF, said it’s time for the world’s central banks and regulators “to get serious about digital currencies” because risks are being taken by “not understanding emerging financial tech products.”

Closer to home, David McKay, Royal Bank’s chief executive, said recently “there are some real concerns about how the bitcoin is being used, that we have to resolve,” adding “fraud” isn’t one of them.

Meanwhile in the world of bitcoin — the best-known crypto-currency — the price hit an all-time high last Friday when it closed at US$5,973. It started 2017 at US$952 and in volatile trading closed Monday at $US5,972 — a level that means a market cap of about US$100 billion. Some have called the price surge a “bubble,” while others says it is caused by usage and hoarding.

Now Canadian accredited investors are getting a chance to purchase units in the country’s first institutional-quality investment portfolio that offers a diversified exposure to the world’s top crypto-currencies. The three main crypto-currencies are bitcoin, ethereum and litecoin.

Investors in the fund — known officially as 3iQ Global Cryptoasset Fund — will also gain access to active managers in the crypto-digital space. The fund is expected to be launched later this week. It will not be listed.

The fund, whose objective is capital appreciation, represents two years of work for Fred Pye, chief executive of 3iQ Corp. the fund’s manager.

And Pye, a financial services industry veteran, is aware of the extensive education job needed.

“Our priority is to work with investment advisers to make sure they understand it. They have to be prudent and skeptical, but if this is the single largest change in their lifetime, they have to participate,” Pye said. He said the first step to understanding is the recognition that they don’t understand bitcoin, with the final step being the realization that understanding is a “moving target.”

Part of that education will be about bitcoin’s inner workings, including how the new supply of bitcoins is created, and its linkage to blockchain (or the bitcoin network).

So why launch such a fund? It flows from Pye’s firm belief that digital currencies “are here to stay. And that Pandora’s box is open. The concept of moving currencies or money around the world, instantaneously, securely and for free, is a great idea.”

For Pye, the only issue is the size of the market. “We don’t know (how big it will be) but if you are under 30 and living in Venezuela you are certainly not owning any Venezuelan currency,” a situation he extends to citizens of other countries.

Financial Post

TD has quickly become a top 10 U.S. bank and it’s not done yet

Toronto-Dominion Bank’s new U.S. head isn’t being critical when he describes the lender as “sub-scale” in small business and corporate lending, and “underweight” in wealth management. He just thinks there’s market share to be had.

“We’ve got loads of room to grow,” said Greg Braca, chief executive officer of TD Bank, the U.S. retail unit of Canada’s largest lender.

Braca, 53, who took over the top job in June following Mike Pedersen’s departure, outlined his plan for the bank’s “next evolution” during an interview last week at Bloomberg’s New York headquarters, including ambitions for its Maine-to-Florida branch network to be a “market share taker.” He said he’s not looking to reinvent the lender, but expand its “foundations and underpinnings” to become a more significant competitor to bigger rivals like Citigroup Inc. and Bank of America Corp.

The Canadian-owned lender has expanded through acquisitions to become the eighth-biggest U.S. retail bank by assets. Toronto-Dominion spent about $17 billion building its U.S. branch network from 2005 to 2010, buying Portland, Maine-based Banknorth Group Inc. and New Jersey’s Commerce Bancorp Inc., as well as lenders in the Carolinas and Florida. TD also has added on credit-card portfolios, an auto financing company and a U.S. money manager.

‘Old fashioned’

Braca, who joined Commerce Bancorp in 2002 and stayed through the transition, described his strategy as “basic, old-fashioned sort of stuff, overlaid onto digital capabilities.” It includes investments in technology, opening more branches in New York, Philadelphia, Washington and throughout Florida, and building on what he calls a “nascent” wealth-management business seeded by the 2013 takeover of New York-based Epoch Holding Corp.

“We have a fantastic opportunity around wealth,” Braca said. “We’ve brought in a lot of people, we’ve rebuilt platforms and we’ve built product capabilities. We are finally now dressed to play.”

The firm has established wealth-management offices in major markets including New York, Philadelphia, Washington and Boston to help with retirement planning, asset management and estate planning, Braca said. He also sees opportunity to leverage Toronto-Dominion’s minority stake in the TD Ameritrade brokerage.

“We very much want to be a focus for our customers and that includes lending to high-net-worth or mass-affluent individuals,” he said. “We think there’s a compelling way we can go to market there.”

Embracing disruption

Given the relatively small size of its wealth-management business, the lender is open to new technology without the fear of it “disrupting the existing capabilities or revenue streams,” Braca said. He sees a place for robo-advising, the low-fee automated investing platform already being adopted by big banks including Morgan Stanley and Bank of America.

“We would view it as a tool rather than some overarching strategy about how you face off against the market,” he said. “As we think through this, we don’t have this inherent large book of business that we’re disrupting.”

Braca said he expects future growth will be fueled internally, though he didn’t rule out more acquisitions.

“Never say never,” Braca said. “You want to look and be aware of what’s going on in the market, you want to be opportunistic. But clearly, we now have the size and scale in the U.S. where we don’t have to do a deal.”

His comments echo those of Toronto-Dominion Bank’s CEO Bharat Masrani, who said he’d rely on internal growth over acquisitions to expand in the U.S. when he took over as head of the parent company about three years ago. Still, Toronto-Dominion has continued with some deals, including working with TD Ameritrade on this year’s $4 billion takeover of Scottrade Financial Services Inc., and earlier buying credit-card portfolios of Target Corp. and Nordstrom Inc.

Digital biscuits

The Toronto-based parent company gets about a third of its annual profit from U.S. retail banking, and has more branches in the country (1,260) than it does in Canada (1,138).

As it shifts toward digital banking, TD Bank plans to differentiate itself by highlighting the same “convenience” theme its brick-and-mortar locations are known for, Braca said. In its early days, TD Bank relied on a “retail-tainment” strategy revolving around coin-counting machines, piggy banks for kids and treats for customers’ pets.

“We used to, 15 years ago, talk about dog biscuits in stores, and that was a convenience point and people loved it,” Braca said. “What’s the digital version of that biscuit?”


Christmas plans face ruin for finance industry as MiFID II looms

The head of currency trading at Deutsche Asset Management AG warns it could ruin some people’s Christmas. Lawyer Neil Robson says he’s working as many as 16 hours a day to help get clients up to speed.

They’re talking about MiFID II, the overhaul of financial-services rules in the European Union that comes into effect in January and seeks to impose transparency by removing conflicts of interest in financial markets. It’s also resulting in late nights for workers and consultants as firms rush to be ready for the biggest change in a decade to regulation in the region.

The Financial Conduct Authority warned last month that some companies have not managed to meet deadlines to ensure they’ll be ready to comply with the revised Markets in Financial Instruments Directive. EU regulators themselves have yet to make key decisions surrounding some of the legislation and risk rule clashes with foreign markets, adding further confusion for the buyside and sellside. U.S. finance firms in particular “seem ill-prepared” for the changes, UBS Group AG analysts wrote in a note to clients on Oct. 2.

“There are fund managers that are just starting to look at this now,” said Robson, a regulatory and compliance partner at Katten Muchin Rosenman, who gave his first presentation on the new rules seven years ago. He warns those lagging behind that “there is very little capacity in the City of London to take on new clients.”

Banks in Europe employed 2.8 million workers at the end of last year, the lowest level since at least 1997 as they shed jobs to repair balance sheets destroyed by the financial crisis and automate more functions. Despite the job cuts, the banks have to pay for extra hires in compliance, increasing the burden on front-office staff.

“What happens to your social life in that environment?” said Michael Ingram, a market strategist at BGC Partners. “It disappears, though perhaps it’s moot given you have few colleagues left to socialize with.”

A London-based fund manager, heavily involved in the implementation of the directive, said his team are bored from spending most of their free time studying the rules and he’s unable to attend post-work drinks or parties while they get up to speed. He asked not to be named as he is not authorized to speak to the press.

“It’s not really a typical cocktail party conversation, you’ll drive your guest out if you start talking MiFID,” said Priya Misra, head of global rates strategy at TD Securities, adding it’s creating extra headaches for research departments. “I have to figure out the Fed and rates but then, also, how do I deal with MiFID? That’s what’s not making it a lot of fun.”

Still, industry veterans say that their work life will settle once everyone has digested the new rules. The European Securities and Markets Authority has also signaled it will take a “rather cautious approach” when the rules are first introduced.

“My experience with changes in regulations is that as soon as they are in, and the system has adapted to them, they get a lot less intense”, Christian Gattiker, head of research at Julius Baer Group Ltd. in Zurich, said in an interview. “As soon as you are familiar with the new regulation standards, then you can start thinking about your life again.”

Others are less optimistic. With just over two months to go before Europe’s MiFID II rules kick in, the vast majority of fund managers aren’t prepared to meet its so-called best execution requirements, according to a recent survey by dark pool operator Liquidnet Holdings Inc.

“If you have started MiFID II projects too late, you won’t have time for anything else for the rest of the year and can’t even celebrate Christmas,” Christian Schoeppe, the head of currency trading at Frankfurt-based Deutsche Asset Management, said in an interview in Barcelona. “This is probably something that has been underestimated across the industry” and “it’s eating up so much time.”

Bloomberg News

Responsible investing will be replaced by ‘investing with no prefixes’

A quarter of a century back, forming your own Canadian-based research organization focused on sustainable investing was probably regarded as an unusual decision.

But it’s turned out to be a prescient move for Michael Jantzi, now chief executive of Sustainalytics Inc., a global investment research organization with offices in 14 cities around the world and more than 450 clients. And, since July, it has a new major shareholder, with Morningstar owning 40 per cent.

“It’s an entirely different world than it was. There has been lots of change as mainstream investors have embraced it in a meaningful way,” said Jantzi, who will be key speaker at Monday’s launch of Responsible Investment Week and who, as part of his earlier work, developed the Canadian Social Investment Database.

As the title suggests, the event runs for a week and focuses on education and awareness about responsible investment. (The 2017 version is the fourth by the Responsible Industry Association, the industry body.) The idea is to promote learning about environmental, social and corporate governance issues that affect investments.

It’s a message that’s increasingly being taken up by institutional investors. For instance, a recent report on the 2017 proxy season prepared by the proxy advisory firm D.F. King noted there was record number of filings regarding environmental and social proposals. The main themes included climate change, sustainability disclosure, gender pay equity and board diversity.

Those proposals are occurring as investors are managing more mandates with more assets on a sustainable investment basis.

And there could be more as surveys repeatedly show that investors, particularly retail, want to invest on a sustainable basis, but lack knowledge. Dustyn Lanz, RIA’s incoming CEO refers to “the awareness gap.” Jantzi noted the financial industry “is there to serve the client and the client seems to be asking for such (products).”

Jantzi said “it’s very clear” environmental and social issues are “risks and opportunities investors want and need to know about.” And those risks have to be integrated into investors’ decision-making processes.

While the information is needed, there are some gaps in disclosure, gaps that become more obvious when the Canadian landscape is compared with what happens elsewhere.

In other countries, largely in Europe, Jantzi said a regulatory framework has been put in place where issuers disclose to investors the “real risks” of matters including climate change and supply change management. “This is the type of (material) we need in Canada. We need to ensure that there’s robust disclosure,” he said, noting in some cases the rules exist but are not enforced.

So what would be the benefits of such disclosure and enforcement? If a level playing were created, there would be no perceived competitive disadvantage between issuers, a situation that would allow investors to make “more informed decisions,” he said.

Jantzi also brings a novel perspective to fiduciary duty, the obligation for an investment advisor to act in the client’s best interest. The obligation, not uniform across the various product providers, is normally viewed in financial returns — the best return for a given level of risk – but Jantzi argues that it needs to be broadened “as part of an informed investment strategy. I would like to see some clarification from the regulators.”

Asked for his thoughts on what responsible investing will look like in a decade, Jantzi said, “it will be called investing with no prefixes. Looking at environmental, social and governance issues will be the way that things are done. Investors will be looking at it because it’s important,” he said. “That’s where we are headed.”

Financial Post

As the ski industry consolidates, not everyone is a winner

Adriaan Demmers spends most winter weekends as an instructor at Chicopee Ski & Summer Resort, a bunny hill near his home in Guelph, Ontario. But the real estate agent and his wife also logged 57 days last winter on slopes from Maine to Utah, using a MAX Pass, which for US$679 buys up to five days each at 44 mountains across North America. The industry average for a day pass is US$113, meaning Demmers would have broken even after six days on the slopes.

“It’s not just about saving money,” says Demmers, 58. “It’s an opportunity to go to all these resorts.”

MAX, an acronym for Multi Alpine Experience, led Demmers to peaks he might not have otherwise considered. One surprise was Mt. Bachelor, an unpretentious Central Oregon resort with 3,365 vertical feet of slopes and miles of gladed trails. It was the first leg of a month-long journey that wound through Crystal Mountain, Wash.; Big Sky, Mont.; Solitude, Utah; and Steamboat and Winter Park in Colorado.

Dropping into the back bowls at Vail Mountain, the flagship for Vail Resorts Inc.

This sampler-like twist on the season pass is perhaps the biggest ski industry game-changer to come along in recent years. Along with MAX Pass, the US$489 Mountain Collective provides two days at each of 16 destinations from the Canadian Rockies to Australia, and Epic Pass, an RFID-enabled lift ticket, costs US$899 and offers seamless, unlimited access to 16 mountains owned by Vail Resorts Inc.

The two are the largest players in a rising trend that offers skiers and snowboarders a break on expensive lift tickets, access to prime snow in drought years, and incentives to visit different peaks. They also signal a shift toward industry consolidation led by Vail Resorts and affiliates of its Colorado-based rival, Aspen Skiing Co.

An Epic Buying Spree

In the past year, Vail Resorts bought Stowe in Vermont and, in a record US$1.3 billion deal, Whistler Blackcomb Holdings in British Columbia, the largest resort in North America. According to Matthew Brooks, a Macquarie Capital analyst who covers Vail and other travel industry firms, it fetched more than double the US$565 million Vail has paid for all of its other mountain acquisitions combined since 2002.

Not to be outdone, in April, Aspen Skiing Co.–which owns Snowmass and Buttermilk, in addition to Aspen and Aspen Highlands–teamed up with investment group KSL Capital Partners LLC to buy the six U.S. and Canadian resorts owned by Intrawest Resort Holdings Inc. for US$1.5 billion. Those properties include Steamboat in Colorado, Canada’s Mont Tremblant, and Stratton in Vermont. Then it acquired Mammoth Resorts’ four mountains in California and Deer Valley in Utah. If the as-yet-unnamed company launches an answer to the EpicPass next season, it will rival Vail’s product both in number of mountains and geographical variety.

These acquisitions are a new phenomenon, in part because they’re the fastest way to gain market share when barriers to entry such as environmental regulations and big infrastructure costs make it hard to add destinations. “They’re not building any new mountains,” says Brooks, the analyst. In fact, no major ski resort has been constructed in North America since Deer Valley and Colorado’s Beaver Creek opened in the early 1980s.

Moreover, by expanding coast-to-coast, these big companies develop feeder streams of new consumers, who may otherwise overlook big-price tag, big-name resorts for more affordable, family-run mountains.

Even independent mountains are banding together into such consortiums as Mountain Collective and MAX Pass. It’s the only way to keep up. In the Northeast, the year-old Peak Pass now offers all-access to seven resorts in Pennsylvania, New York, Vermont, and New Hampshire, from Hunter Mountain to Mount Snow. Similarly, the western-U.S.-centric Powder Alliance, which started in 2013 with 12 resorts and has since grown to 16, gives season pass holders of any member resort up to 45 days of free skiing across the portfolio.

Hedging Against Mother Nature

Another incentive to consolidate is that having more mountains offers companies an insurance policy against bad snowfall.

“Good snow trumps a good economy,” says Michael Berry, president of the United States Ski and Snowboard Association. Over the past two decades, he says, the total number of active annual U.S. skiers and snowboarders peaked during the worst of the Great Recession, from 2009 to 2011. Among the industry’s hardest moments were the four years of drought in California, which left many mountainsides bare in the most populous state.

Vail has seen this first-hand: Its visitor count tumbled last year, thanks to late snow in Colorado. For a company that made roughly half its US$1.6 billion revenue on lift tickets in fiscal 2017, that puts high stakes on good snowfall. “From a business perspective, [consolidation] locks in that loyalty and weatherproofs us for off-weather years,” says Pete Sonntag, chief operating officer at Whistler.

Those who are willing to pay up front stand to win, too. With passes that include tony resorts in the Rockies alongside mountains that are easily accessible from such cities as New York, Boston, Chicago, or San Francisco, they can now buy a season pass for a favorite weekend spot and effectively nab a steep discount for once-a-year trips farther afield, where conditions may be more of a sure thing.

Dollars and Cents

Most season passes pay for themselves after four to six visits when compared with one-day-ticket window costs, which are climbing faster than inflation. According to a presentation from the National Ski Areas Association, single-day weekend tickets averaged US$113 last winter, up from about US$90 in the 2013-2014 season.

They aren’t money-savers for everyone. Even to experienced ski travelers such as Kary York, who has organized trips for seven years for the Seattle-area Sno Joke Club, the number of options can be confusing. For example, Mountain Collective’s pass is limited to two free days at each of 16 mountains–additional lift tickets sell for half the window price. It’s a great deal for a skier who can hop from resort to resort on weekends; for someone that spends a week-long vacation in one place, it may not pencil out.

Families have further considerations in mind. While EpicPass offers unlimited lift tickets across all its mountains, it costs US$469 for kids aged 5-12 and has blackouts on certain weekends and holidays; Mountain Collective sells a limited number of US$1 passes for children under 12; even its standard US$99 price tag is cheaper than a kids’ day pass at Vail’s namesake resort.

York, whose day job is being an insurance industry headhunter, says she spends “a ton of time” navigating the options ahead of each ski season. As she put it, “You gotta read the fine print.”

Whistler Blackcomb’s journey to becoming part of Vail Resorts a buy-and-hold success story

Anniversaries, as all husbands know, must never been forgotten: excuses, no matter how credible, never get over the line.

There are also anniversaries in the stock market: 30 years ago this week there was Black Monday, a day when the U.S. market fell by 508 points — or more than 22 per cent, it’s worst day in history.

Investors in the former TSX-listed Whistler Blackcomb Holdings are also celebrating an anniversary this week: one year back the company was acquired by the U.S. publicly-listed Vail Resorts in a cash and share offer.

Owners were offered $17.50 in cash and 0.0975 of a Vail share — a package worth $36 at the time. The plan of arrangement was completed on Oct. 17. Canadian shareholders received exchangeable shares, which are unlisted.

And for those who kept their Vail shares, the ride has been straight up. When the deal was announced, on Aug. 8 2016, Vail shares were trading at US$143.97. Those same shares traded Thursday at US$221.675. The shares hit an all time high of US$232.28 on Sept. 22, 2017.

The numbers mean the Vail part of the deal was worth US$14.03 when the deal was announced. The same Vail share was worth US$21.61 on Thursday — a 50 per cent gain. In Canadian dollar terms, the Vail share is worth a tad less given the decline in the loonie relative to the U.S. dollar over the period.

Robert Grundleger, a co-founding partner at alternative fund manager Groundlayer Capital, had been a long-time holder of Whistler Blackcomb and has held shares in Vail for one year. (Anne MacLean is the other co-founder.)

And he likes what he sees, given that in the past two years, Vail has added to its portfolio of ski destinations through the purchase of Stowe Mountain Resort in Vermont and Perisher Valley in Australia. “The strategy is to buy the resorts, that gives them the names of the subscribers, those who buy the lift pass, and then offer them the Epic pass which is good for any Vail resort.”

In other words, the Epic pass has created a network of great skiing resorts, which subscribers pay, ahead of time, to use.

In this way, Vail has mitigated, at least partly, the risk of there being no snow given that the pre-paid pass is worth US$500 million to the company. “It has taken the snow risk off the table,” said Grundleger whose enthusiasm is shared by Henry Ellenbogen, manager of the T. Rowe Price New Horizons fund.

In a recent interview with Barron’s, the U.S.-based manager said he bought Vail Resorts (in 2010) because it was a company in transition moving from being a transactional real estate company to a “subscription business with high returns on capital and a network effect, underpinned by world-class data and data-based marketing.”

Those efforts, Ellenbogen said, mean Vail has gained market share. He terms the company an example of his good-to-great thesis, meaning a situation where durable, growing companies “use technology to improve their relationship with customers and make themselves more efficient.”

There is another element to the tale: when Whistler Blackcomb went public in 2010, it struggled to gain traction. Initially the plan was to sell the shares in the $14-$15 range with a 6.5 to 7 per cent dividend. Those plans were revised to a $12 share price and a 7.8 per cent yield. The changed terms met with investor interest as the $45 million over-allotment option was exercised.

Seven years on, the reality is holders who bought in the IPO have done well: in rough terms and ignoring dividends, $12 has been turned into almost $45.

Royal Bank of Canada shares join the $100 club, despite splitting four times

It may be just another number but Wednesday the share price of the Royal Bank of Canada, the country’s largest corporation with a market cap of $145 billion, reached a milestone: it traded above $100. In the same week, Onex Corp. also traded above $100 for the first time.

Having two issuers crack the ton in the same week is unusual because most companies tend to split their stock before it reaches $100.

In fact, since March 13 1981, Royal has split its stock on four occasions: accordingly, in un-split terms Royal traded at $1,600 this week. Apart from 1981, it also split in 1990, 2000 and 2006. For its part, Onex, which went public in 1987, has split its stock on two occasions: in June of 1999 and June of 2000. Accordingly, the $100 reached this week translates, in un-split terms, to $400.

Companies tend to split their stock because it allows greater participation by investors, particularly the average punter. In this way a board lot or the minimum amount that can be purchased is more affordable. (For shares above $1, a purchase of at least 100 shares is required.) And there is also an old investment theory that investors can do well if they buy shares of a company that announces a share split and holds them.

According to the TSX, 15 other companies have share prices above $100: Agrium; Canadian National; CIBC; Canadian Tire; Constellation Software; CP Rail; Dollarama; E-L Financial; Fairfax Financial; Intact Financial; Lassonde Industries; Molson Coors; Morguard Corp.; Premium Brands and George Weston Ltd. There are about 50 companies whose debentures trade above $100.

South of the border, high priced shares tend to be more common than in Canada. Berkshire Hathaway is the poster child for not splitting its stock and for a high share price: it closed Wednesday at US$281,290.

But Apple, the world’s largest company — with a market cap of US$825 billion — has no compunctions: in it’s time as a public company it has split its shares on four occasions with the most recent being in June 2014 when it split seven for one. A current share is now the equivalent of 56 original shares.

Carve-out comments

Two comments on bond carve-outs by provincial government borrowers.

New Brunswick: This week it raised $400 million of which $100 million was for a carve-out and placed separately with one investor. (This deal is the borrower’s second carve-out.) The rest of the issue was sold through a syndicate led by CIBC World Markets. In an emailed response the province’s finance department said the carve out, “allowed New Brunswick to grow the size of a public issue without materially affecting the distribution of bonds.”

Ontario: This province has become the big player in the carve-out world since following the lead set by Quebec in 2011. (Ontario calls its program the large order procedure.)

Since late 2011, the province has maintained fairly high levels for carve outs: a single borrower has to be prepared to purchase $600 million for borrowings for terms of less than 10 years; $500 million for borrowings with a term between 10 and 29 years; and $400 million for borrowings for terms of 30 years.

Despite those high minimums, the province has had no difficulty in completing bond offerings with carve outs. According to Harry Koza from IFR Markets, Ontario has completed two borrowings this year with carve outs: $2.25 billion has been raised of which $1.2 billion came via carve-outs. Ontario’s largest carve out is $1 billion (that was part of a 2013 deal that raised a total of $1.5 billion.)

Financial Post

Scotiabank said to be mulling sale of the world’s oldest gold trader

Canada’s Bank of Nova Scotia is exploring options for its gold business ScotiaMocatta, including a possible sale of the world’s oldest gold trader, three sources familiar with the matter said on Wednesday.

The Financial Times reported earlier on Wednesday that Scotiabank had made a decision to sell the business following a massive money laundering scandal centered on a U.S. refinery that involved smuggled gold from South America. It said JP Morgan had been appointed to oversee the sale.

Scotiabank said it would not comment on rumours and market speculation.

One of the sources said a review of ScotiaMocatta’s future had been underway for several months. Another source said it had been seeking a buyer for up to a year and was likely to shrink the business if a sale is not completed.

The sources spoke on condition of anonymity to discuss the confidential process.

ScotiaMocatta is one of London’s main gold trading banks with a history dating back to the 17th century. It was acquired by Scotiabank from Standard Chartered in 1997 and the Canadian bank has since expanded its operations.

The Financial Times, citing market sources, reported rumours that Chinese buyers were key targets of the Scotiabank sale.

Scotiabank, which has the biggest foreign presence of any Canadian bank, is focusing its international strategy on the Pacific Alliance, a Latin American trade bloc comprising Mexico, Peru, Chile and Colombia.

Scotiabank edged up 0.1 per cent to $80.85 on the Toronto Stock Exchange at mid-afternoon.

© Thomson Reuters 2017