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B11-B17OTTAWA/QUEBECEDITION ■ FRIDAY,MARCH6,2020 ■ GLOBEANDMAIL.COMS&P/TSX
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+25.00COMPANIESAECON.....................................................B9
ATHABASCAOIL.....................................B9
CNRL........................................................B5
CANOPY..................................................B9
DESCARTESSYSTEMS.............................B9
FLYBE......................................................B6
JAMIESON...............................................B8
SPINMASTER..........................................B9Canada’s banks are in increasingly close
contact withgovernments and regulators
about contingency plans to prepare the fi-
nancial sector to withstand potential out-
breaks of COVID-19.
Although banks have focused on updat-
ing and testing their own business conti-
nuity plans, conversations with the bank-
ing regulator – the Office of the Superin-
tendent of Financial Institutions (OSFI) –
have become more frequent than usual.
So have high-level calls between bank ex-
ecutives and the Finance Ministry, accord-
ing to sources familiar with the discus-
sions, whom The Globe and Mail is not
identifying because they are not autho-
rized to speak about the talks publicly.
Banks’ planning in the early days of the
new coronavirus – which causes a disease
called COVID-19 – focused on minimizing
unnecessary business travel, restricting in-
person meetings and attendance at large
gatherings such as conferences and testing
systems to make sure they could handle
large numbers of employees logging in re-
motely.
It is not clear whether the banks plan to
implement any new measures in branch-
es.
Each of Canada’s largest banks has tens
of thousands of employees in multiple
countries, and executives and risk officers
have to ready themselves for more drastic
measures, if necessary. Those could in-
clude splitting up teams to reduce the risk
of contagion in any one of the bank’s func-
tions.
BANKS, B5Banksstepup
contingency
planningto
handleoutbreak
JAMESBRADSHAW
BANKINGREPORTERA global airlines group says the COVID-19
outbreak could slash spending on airfares
by US$63-billion, a loss that could swell to
US$113-billion if the deadly illness be-
comes even more widespread.
The International Air Transport Associ-
ation warning rattled stock markets, which
have already plunged over the past two
weeks amid fears the coronavirus will
hammer business and consumer spending
and tip the world into recession.
The IATA, which represents 290 airlines
that collectively account for 82 per cent of
global passenger traffic, issued two esti-
mates Thursday of airlines’ lost revenue.
The first scenario models a “limited”
spread of the virus to countries with more
than 100 cases and predicts an 11-per-cent
drop in revenue, a loss of US$63-billion.
The “extensive spread scenario” of mar-
kets that have at least 10 COVID-19 cases
forecasts losses of US$113-billion, a 19-per-
cent drop in seat sales. “Financially, that
would be on a scale equivalent to what the
industry experienced in the global finan-
cial crisis,” the IATA said.
“In little over two months, the indus-
try’s prospects in much of the world have
taken a dramatic turn for the worse,” said
Alexandre de Juniac, the IATA’s chief exec-
utive officer. “Many airlines are cutting ca-
pacity and taking emergency measures to
reduce costs.”
Airlines have scaled back or eliminated
thousands of flights to China, Italy and
other affected countries as consumers and
businesses cancel travel plans to avoid
contracting the respiratory illness.
AIRLINES,B6Coronavirushit
toairlinescould
top$100-billion:
industrygroup
ERICATKINSTRANSPORTATIONREPORTERGEOFFCADDICK/AFPVIAGETTYIMAGESOBITUARY
MichaelBabad‘wasat
theveryheart’ofThe
Globe’sjournalism B2OPINION
CRAshoulddoour
taxesforfree,Rita
Trichurwrites B4GLOBEINVESTOR
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onshortcallamid
Cineworldtakeover B9BANKRUPTCY
BritishregionalairlineFlybecollapses B6
The three national wireless carriers
need to cut the price of their mid-tier
plans by 25 per cent over two years or
face further regulatory action, the feder-
al government says, as it lays out the de-
tails of its promise to reduce cellphone
bills.
Ottawa is demanding thatBCE Inc.,
Rogers Communications Inc.andTe-
lus Corp.substantially lower the prices
of unlimited talk-and-text plans that of-
fer two gigabytes, four gigabytes and six
gigabytes of data.
That means a two-gigabyte plan
would go down to $37.50 a month from
$50, while a six-gigabyte plan would go
down to $45 from $60. Thegovernment
said it used prices advertised on the car-
riers’ websites in early 2020 for plans
that don’t include device costs for its
benchmarks.
Navdeep Bains, the Minister of Inno-
vation, Science and Industry, said the
government is targeting mid-tier plans
because their prices haven’t come down
as much as those at the low and high
ends of the market.
During the past election campaign,
the Liberals promised to drop wireless
rates, saying Canadians were concernedabout high prices.
“We’ve seen progress ... but more
needs to be done,” Mr. Bains said in an
interview Thursday.
If the carriers fail to meet thegovern-
ment’s targets within two years, Ottawa
is prepared to take regulatory actions,
Mr. Bains said.
That could include, he says, forcing
carriers to open their networks to wire-
less resellers – referred to in the industry
as mobile virtual network operators, or
MVNOs – something that the Canadian
Radio-television and Telecommunica-
tions Commission was considering dur-
ing hearings that wrapped up last week.
TELECOMS,B6Ottawasaysbigthreetelecomcompaniesmustlower
wirelesspricesorfaceregulatoryconsequences
ALEXANDRAPOSADZKI
TELECOMREPORTER
Bank of Canada Governor Stephen Po-
loz said the need to buffer the economic
harm from the novel coronavirus out-
weighs the risk that lower interest rates
could deepen Canada’s household debt
problems, as the central bank scram-
bles to “get out ahead” of a feared con-
sumer-led slump.
In his first public comments since the
bank slashed its key lending rate by a
half a percentage point Wednesday, Mr.
Poloz told a Toronto business audience
that the anticipated downturn caused
by the virus would likely mute the stim-
ulative impact of the deep rate cut on
housing demand and consumer debt.
He said the bank believes the most
“profound” effect on the Canadian
economy from the virus will be its dam-
age to consumer confidence and the re-
sulting loss of demand, arguing that
lower interest rates would help cushion
the impact on consumers.
“Governing council [the bank’s rate-
setting body] agreed that the downside
risks to the economy today are more
than sufficient to outweigh our contin-
uing concern about [debt-related] fi-
nancial vulnerabilities,” he said. “In-
deed, declining consumer confidence
would naturally lead to reduced activity
in the housing market. So in this con-
text, lower interest rates will actually
help to stabilize the housing market,
rather than contribute to froth.”
Speaking with reporters after hisspeech, Mr. Poloz indicated that the
governing council had been leaning to-
ward a quarter-point rate cut anyway,
given evidence that Canada’s tepid
fourth quarter and likely slow first quar-
ter weren’t merely products of tempo-
rary disruptions such as weather,
strikes and rail blockades, but rather re-
flected “structural” economic weak-
ness.
The rapid escalation of coronavirus
and COVID-19 fears, which now threat-
en second-quarter growth, convinced
the bank’s officials that they needed an
even bigger cut – the biggest since the
2008-09 financial crisis – rather than
wait for the outbreak to start imposing
further weight on Canadian economic
indicators.
BOC,B6Virusrisksoutweighconsumer
debtworries,Polozsays
BankofCanadaGovernorsaysratecutwillstabilizehousingmarket,notcause‘froth’
StephenPolozsaysthemost‘profound’effectofthecoronaviruswillbeonconsumerconfidence.CHRISYOUNG/CANADIANPRESS
BILLCURRY
DAVIDPARKINSON