Is Tobi the next Elon?

Good morning! In this week’s newsletter, Stephanie Hughes talks to Laurentian’s Rania Llewellyn about what’s ahead for the banks in 2023; Denise Paglinawan on the latest in CIBC’s $1 billion fight with Cerberus; and Barbara Shecter on Tobi, Elon and their generation of CEOs have embraced social media.

— Joe Hood, Managing Editor, Financial Post

Rania Llewellyn goes back to basics

Rania Llewellyn took the helm of Laurentian Bank in the middle of the pandemic and quickly righted the ship, so the prospect of another year of inflation-fuelled uncertainty doesn’t faze her much. But how exactly does she plan to get through it? “You have to manage your expenses extremely tightly,” she told the Financial Post’s Stephanie Hughes in a year-end interview. In other years, innovation spending might differentiate the winners from the losers, but Llewellyn thinks getting back to basics will be key In 2023. And cost control, a key part of her turnaround plan, is top of the list.

LAURENTIAN’S LEADER

CIBC to appeal $1B damages award 

Canada’s banks may be rolling in profits, but $1 billion still gets their attention. That’s how much CIBC believes a ruling made Tuesday in U.S. court will cost the bank — unless it succeeds on appeal — after a deal with investment powerhouse Cerberus went sour. Cerberus sued CIBC in 2015, accusing it of failing to live up to the terms of the 2008 deal, which was designed to reduce the Canadian bank’s exposure to U.S. residential real estate during the Great Financial Crisis. CIBC has insisted it fulfilled its obligations, but in December a court decided differently. On Tuesday, as Denise Paglinawan reported, the U.S. court ordered CIBC to pay US$491 million in damages plus interest — a figure that CIBC estimated will lead to an after tax charge of $1.1 billion. CIBC on Wednesday announced it intended to appeal. Those keeping score will note the penalty amounts to about two per cent of the bank’s market cap of just over $50 billion.

DEAL DISPUTE

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Is Tobi the next Elon?

Elon Musk’s takeover of Twitter dominated the headlines for weeks in the later stages of 2022, but he wasn’t the only tech CEO whose social media presence was noteworthy. While not in Musk’s league when it comes to courting controversy, Shopify CEO Tobias Lütke showed he was at least in the same ballpark, touting his company’s prospects and engaging the public on a range of issues when most Canadian CEOs would keep their heads below the parapets. As Barbara Shecter writes, the two are part of a new generation of risk-taking tech entrepreneurs who have embraced social media — with all the benefits and potential hazards that come with it.

TAKING THEIR MESSAGE TO THE MASSES

Why OSFI head Peter Routledge is ‘optimistic and wary at the same time’ heading into 2023   

More pension plans in surplus due to higher interest rates, but inflation risks abound: Mercer 

Why those waiting for a return to normal in commercial real estate will get left behind 

Bank robberies fall to zero for first time in Denmark as cash disappears 

Apocalypse now? Canadians turn to cash as a hedge against chaos 

JPMorgan leads Canadian M&A for first time in five years 

Kevin Carmichael: Tiff Macklem made some mistakes, but at least he’s not hiding from them 

The FP Finance Newsletter was compiled by FP Managing Editor Joe Hood. Reporters Barbara Shecter and Stephanie Hughes go where the action is. Designer Gigi Suhanic made it look great and web editors Pamela Heaven, Victoria Wells and Noella Ovid contributed at every step along the way.

Do you work in Finance? Do you have a tip? In between Zoom calls, let Barbara or Stephanie know what’s up.

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