The Sharks are Circling

The predatory nature of Canadian banks is starting to emerge, and no surprise that the Royal Bank of Canada (RBC) is the leader of the pack. For RBC it's always been about more than "lending".

In the Alberta oil industry crash of 1982 RBC was the chief plunderer, arbitrarily pulling credit lines from established clients due to a change in "industry priorities" -- 30 days to make other arrangements or RBC seizes pledged assets -- nice. This for companies that never missed a payment, had strong financials and a history of outstanding credit (one geophysical consulting firm of over 150 employees comes to mind -- wiped out). Beware of the 'demand' loan...

Now there is a tasty little Canadian manufacturer of "roadside bomb jammers, blast suits and other extreme hazard equipment" on the block: Allen-Vanguard Corp. Gee, wonder if RBC might just have a buyer in the wings for those 21 cent shares (the stock traded around $11 in late 2007). Article.

The products are clearly in high demand and the company is at a critical turning point. Meanwhile, business as usual? Article.

BOHICA - bend over, here it comes again. If you are with RBC (in particular) and business in your industry sector is slowing, start looking at financing alternatives pretty soon -- especially if you have co-signed financing agreements personally behind your business or have collateral security agreements in place. The sharks are circling and your assets are in the bait sling.