Finance Canada has repeatedly refused to disclose who is behind the massive loan to the contentious, publicly owned oilsands pipeline. However, data obtained from a Bloomberg Terminal on Monday and reviewed by Canada’s National Observer shows TD, RBC, CIBC, BMO, Scotiabank and the National Bank of Canada are all listed as lenders.
Guaranteed returns on a loan that size are a pretty sweet deal. Even if Trans Mountain fails to pay back the entire amount, the federal government’s promise means there is no risk of losing money for the banks involved. The exact amount loaned by each bank was not disclosed, however, if the $10 billion was shared equally, each bank would have put in $1.67 billion, representing the upper end of Canadian banks’ lending to fossil fuel companies in recent years.
The deal was inked on April 29 — the same day the federal loan guarantee was approved by Prime Minister Justin Trudeau’s cabinet, as first reported by Politico. It matures in one year, and TD serves as the lead co-ordinator.
Stand.earth climate finance director Richard Brooks said those dates aligning shows “the federal cabinet approval was a rubber stamp.” Moreover, a $10-billion loan co-ordinated across six banks is a complex deal that would have been in the works for months, raising questions about Finance Canada’s transparency, Brooks said.
“Why is this deal being hidden from the Canadian public?” he said. “Particularly because this is a publicly owned Crown corporation, and it's being financed in part by taxpayer dollars, and so there should be an intense level of transparency, not this type of opaqueness.”
Brooks said he believes the secrecy comes from the department’s determination to build the pipeline even though there aren’t credible arguments in favour of doing so.
“If this was a robust, guaranteed-to-be-profitable, guaranteed-to-be-climate-safe, not an Indigenous-rights-violating project, then we would be having Finance Canada and the Canadian banks shouting this out from the rooftops,” he said.
“But because it's a boondoggle from a financial standpoint, because it's literally a carbon bomb that's being built across the mountains, because it is a project that is violating Indigenous rights and goes against all the climate science, including the International Energy Agency and their modelling around what we need to do to reach net-zero emissions and keep temperatures under 2 C, nobody is proud of this project.
“That's why there's this level of secrecy where you have to pull teeth to get information and go through proprietary financial terminals to be able to access just the most basic information about who is supporting this project and to what degree.”
Finance Canada would rather you not know these are the Canadian banks propping up #TMX. #cdnpoli
Brooks also said it was revealing that only Canadian financial institutions got in on the deal.
"That's really a testament to how tar sands and tar sands infrastructure, like this pipeline, are perceived by non-Canadian financial institutions," he said. "And also what the financial assessment is of those other institutions in regards to this project."
As thoroughly documented by Canada’s National Observer, the business case for the Trans Mountain pipeline expansion has been shattered by a series of cost overruns. To find a profit, experts expect the company would have to raise tolls on the pipeline. Charging producers this higher fee would make the oil too expensive to compete in international markets, experts say, effectively undermining its entire purpose.
Moreover, to attract private lenders like the big Canadian banks, experts say the federal government would likely have to subordinate its debt, meaning private-sector financiers will be paid first if the project is completed and earns revenue. That effectively means the Canadian public is unlikely to see returns on the billions it has already sunk into the project.
Finance Canada did not return a request for comment by deadline. Scotiabank declined to comment. RBC, TD, BMO, CIBC and the National Bank of Canada did not return requests for comment.