Quebec's Desjardins takes further ABCP writedowns

Mon Mar 3, 2008 11:29am EST
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QUEBEC CITY (Reuters) - Desjardins Group, the big financial cooperative in the province of Quebec, said on Monday that it took further writedowns in the fourth quarter on its holdings of some Canadian asset-backed commercial paper.

Desjardins wrote down an additional C$116 million (C$79 million after tax) worth of non-bank sponsored ABCP in the quarter ended December 31, on top of writedowns in the previous quarter.

In total, Desjardins said it has recorded writedowns of C$273 million (C$186 million after tax), or about 16 percent, of the value of its non-bank ABCP securities, which it said were worth about C$1.7 billion at year-end, excluding some securities associated with guaranteed savings products.

On a conference call, Desjardins executives said the commercial paper charges were in line with the writedowns of roughly 15 percent that other companies and investors have taken on non-bank ABCP, and they view the chances as "very high" that an ongoing ABCP restructuring effort will succeed.

Late on Friday, the Canadian investor group leading the restructuring said the process had been delayed until April because of the complex nature of the talks.

The group, led by veteran Bay Street lawyer Purdy Crawford, is trying to unfreeze some C$33 billion ($33 billion) of non-bank ABCP that seized up last August amid fears that the underlying assets were tied to the deteriorating U.S. subprime mortgage market.

The investor group had previously expected to finish its work by March. It now expects a meeting of noteholders to occur in mid-April, with closing seen "toward the end" of April.

Other financial institutions and pension managers in Quebec have taken large hits from their non-bank ABCP investments.

The pension fund manager Caisse de depot et placement du Quebec said last month it took a C$1.9 billion ($1.9 billion) provision in 2007 on its C$12.6 billion of asset-backed commercial paper holdings.   Continued...