Good morning, I’m Erica Alini. The story I’m here to tell you today lies at the crossroads of the issues I cover as The Globe’s personal economics reporter: public policy, personal finance, and the broader economic forces that shape them.
We’ll get into the latest on Trump’s tariff threats, which are understandably commanding our attention. But we also want to make sure we don’t lose sight of other issues weighing on Canadians amid the chaos. Imagine, for example, that your bank suddenly dropped you as a client— without explanation. More on that below, but first:
In the news
The federal government is weighing the appointment of a border czar, as advocated by the business community, to address U.S. security concerns.
Mark Carney promises to scrap the carbon levy if he wins the Liberal leadership. Chrystia Freeland has already promised to cancel it after years of defending the measure.
Rogers Communications Inc.’s broadcast rights to the NHL are uncertain as the puck drops on talks for a new Canadian TV deal.
Mountain Equipment Co. seeks cash infusion as its inventory clearout batters bottom line.
On the radar
- Today Canada will release monthly real GDP data for November.
- In the U.S., we will learn numbers on personal spending and income for January, as well as the employment cost index for Q4.
- Earnings include: AbbVie Inc.; Brookfield Business Partners LP; Brookfield Renewable Partners LP; Chevron Corp.; Colgate-Palmolive Co.; Exxon Mobil Corp.; Imperial Oil Ltd.
Tariff tracker
» Pressing ahead: Donald Trump says that tariffs are coming Saturday. The U.S. President will impose 25-per-cent tariffs on goods from Canada and Mexico, however, he said Canadian oil might be exempt from the tariffs.
- The levies threaten to deliver massive economic shocks to two of the United States’ biggest trading partners.
- Canada is the top foreign supplier of oil to the United States, representing about 60 per cent of its imports, and hitting a record of 4.3 million barrels a day last year.
» Support and protection: The President mentioned border issues and imbalances in trade between as reasons for tariffs. Ottawa is now considering appointing a border czar after requests from the business community to respond to his complaints.
- One name that has been raised as a possible candidate for the role is Wayne Eyre, the retired general who formerly served as Canada’s chief of the defence staff.
- Alberta Premier Danielle Smith is proposing Canada deepen collaboration with the U.S. on Arctic security.
- CIBC chief executive officer Victor Dodig joined the call for broad government supports for businesses and consumers potentially affected by tariffs.
- Dragons’ Den star Wes Hall has also called on corporate leaders to speak up on Trump tariffs.
» Zone of uncertainty, continued: With U.S. sales either the largest or fastest-growing part of certain businesses, some companies do not believe they can withstand the 25-per-cent tariffs without making changes to their operations.
- Already, some successful Canadian startups are eyeing moving down south. The homegrown companies are not happy but feel they have no choice. “I feel like we are a pawn on a chessboard,” said Flourish Pancakes founder Andrew Andriano.
Opinion: Trump’s tariffs are about to exacerbate Canada’s productivity crisis. Will our legislators finally take action?
Opinion: Where are our friends in Canada’s fight against Trump’s tariffs?
A Mississauga entrepreneur in his office, originally from Nigeria—who has lost access to his banking services.Adetona Omokanye/The Globe and Mail
In focus
Why are banks kicking out some of their clients?
My reporting on this issue started when a Toronto entrepreneur reached out to me with a striking story: Most of the big banks had ejected him as a client, and he had no idea why.
Over time, the businessman, who is Black and originally from Nigeria, had become convinced the decisions were motivated by racism. But a costly and lengthy attempt to have his case heard before the Canadian Human Rights Tribunal had led nowhere, including failing to yield any useful information about why his bank accounts had been abruptly closed. He wanted to take his story public to raise awareness about the issue.
My initial round of reporting into the case provided frustratingly few insights. It was easy to verify what my source was saying, but I couldn’t make sense of it. Was it an isolated incident or part of a broader issue?
The answer came from a conversation I had with The Globe’s banking reporter, Stefanie Marotta. The case sounded like debanking, or de-risking, she said, a little-known process financial institutions use to quickly offload customers they consider too risky.
This typically happens when a bank detects unusual transactions that suggest a customer may be linked to money laundering, terrorist financing, fraud or other crimes, Stefanie said. Multiple red flags can result in a financial institution swiftly moving to shut down a client’s accounts. The bank does not have to provide an explanation and, in some cases, it is prohibited from doing so.
Suddenly the story started to take shape. I teamed up with Stefanie as well as Alexandra Posadzki, a long-time business reporter at the Globe who had recently taken on a new beat covering financial and cyber crime.
As we found more people who’d been debanked and talked to industry experts, it became apparent that this was a growing issue for both customers and the banks.
While instances of debanking are rare, they’re becoming more common as financial institutions are under unprecedented pressure from both Canadian and U.S. regulators to crack down on financial crime.
Security lapses are becoming increasingly expensive for the financial industry.
TD Bank was recently fined US$3-billion after pleading guilty in a U.S. money-laundering case. Canada’s own anti-money-laundering watchdog has also levied its largest-ever penalties in recent months.
And failing to detect and clamp down on financial crooks can also significantly tarnish the banks’ reputations.
As both authorities expect the banks to spot and flag more and more suspicious transactions and accounts, there’s a growing risk for collateral damage: customers with unusual profiles or transaction patterns who might become financial outcasts even though they haven’t done anything illegal.
And debanking can have devastating consequences for individuals and businesses. People may find themselves relying on high-interest loans while they scramble to transfer their mortgage or lines of credit to another bank. Companies may have to explain to creditors and investors why they no longer have a bank account.
And because banks won’t say what triggered the debanking, clients can unwittingly repeat the behaviour that caused alarm at another financial institution and lose access to their accounts again.
Few rules protect those who’ve been wrongly debanked. Financial regulators and banking ombuds offices have limited oversight over those decisions and even less power to reverse them.
At the same time, customers who do merit debanking are often able to simply switch to another bank and continue on with their (illegal) business.
The end result, critics say, is a system that’s failing both innocent clients and the banks.
Bookmarked
On our reading list
Labour check: A federal minister invited the Amazon CEO to meet over job losses in Quebec but said he was rejected. The Amazon CEO then rejected the rejection.
A little cleaner: Shell Canada Ltd. is exiting the Alberta oil sands, as it boosts its stake in a carbon-capture project outside Edmonton.
Cup of joe: The coffee price rally continues as arabica futures on the ICE exchange hit a new record approaching $4 per pound on tight supplies and fears over the future of crops.
Tax matters: Consider these tips when setting up a first home savings account (a.k.a. the FHSA).
Morning update
Global markets edged higher, buoyed by Big Tech earnings, but cautious after U.S. President Donald Trump renewed his tariffs pledge. Wall Street futures were in positive territory ahead of key inflation data, while TSX futures followed sentiment higher.
Overseas, the pan-European STOXX 600 was up 0.47 per cent in morning trading. Britain’s FTSE 100 rose 0.34 per cent, Germany’s DAX gained 0.33 per cent and France’s CAC 40 advanced 0.54 per cent.
In Asia, Japan’s Nikkei rose 0.15 per cent, while Hong Kong’s markets were closed for lunar new year celebrations.
The Canadian dollar traded at 69.01 U.S. cents.