Welcome to Bay Street Edition, our weekly newsletter devoted to what’s happening in Canadian finance, covering strategy, deals, people moves and economics. I’m Christine Dobby , Bloomberg’s Toronto-based banking reporter, and you’ll find me in your inbox every Friday. This week, we’re talking about Goeasy’s credit crisis, whether Chinese EVs could soon be assembled in Ontario and the depressing fa...
Welcome to Bay Street Edition, our weekly newsletter devoted to what’s happening in Canadian finance, covering strategy, deals, people moves and economics. I’m Christine Dobby , Bloomberg’s Toronto-based banking reporter, and you’ll find me in your inbox every Friday. This week, we’re talking about Goeasy’s credit crisis, whether Chinese EVs could soon be assembled in Ontario and the depressing fate of some French wines. Plus: candy heists. Please share this newsletter with your friends and colleagues, and if it was forwarded to you, sign up here to receive it every week. Easy Does It It’s been a tough slog at Goeasy lately. The consumer lender is a fallen star. The company delivered a 1,500% total return for shareholders over a 10-year period — then came a prescient short seller’s report, followed by the disclosure of a surge of bad debts , and now it’s in a deep slump. Over the past few weeks, Goeasy has come clean about serious credit troubles at its LendCare business, which offers loans through used-car dealers, recreational-vehicle sellers and other retail channels, and makes up 43% of Goeasy’s lending portfolio. For those concerned about the fate of Canadian consumers, the question is whether the developments at Goeasy represent a leading signal — a sign that over-leveraged households are on the verge of cracking — or just more noise. At Goeasy, the warning bells began ringing in September, when Jehoshaphat Research issued a short report attacking its accounting practices. The lender denied the claims, but investors nevertheless took a closer look at its loan-loss assumptions. In November, a disappointing quarterly report raised fresh questions about its earnings power, and a month later, its relatively new CEO, ex-Scotiabank executive Dan Rees, stepped down for health reasons. The reckoning came last month, when Goeasy announced a surge in net charge-offs. The trouble, executives said on a call this week, stemmed from LendCare’s over-reliance on loans origina...