POLITICS

Ottawa asks financial regulator to conduct risk review of Farm Credit Canada

03/07/2013 01:48 EST | Updated 05/07/2013 05:12 EDT
The federal government has asked Canada's financial regulator to do a risk assessment of Farm Credit Canada.

The Crown corporation has loans to farmers and agribusinesses worth more than $25 billion and its loan portfolio has grown for 20 consecutive years.

The Office of the Superintendent of Financial Institutions (OSFI) isn't releasing details of the review, but said it would report its findings to the departments of finance and agriculture.

Agriculture Minister Gerry Ritz said producers are being well served by Farm Credit Canada, which has been criticized by private lenders.

"They are constantly under pressure from the chartered banks and credit unions to do less, not more," Ritz said from Tokyo.

"I'm here to say very publicly that I expect Farm Credit (Canada) to continue to play the dynamic role they play in the farm sector."

Ritz said it is possible the FCC's role in agriculture could expand in the future, but he didn't say how.

He praised the FCC for growing its business without any government financial guarantees.

"We want to assure Canadians that even in doing that they don't have money at risk."

Along with loans, the FCC provides producers with insurance, software, learning programs and other business services.

The corporation said it follows sound business practices, is financially self-sustaining and pays dividends to the federal government.

"Government entities are routinely examined as part of proper oversight," Trevor Sutter, an FCC spokesman, said in a prepared statement from Regina.

"Our risk models indicate the level of risk on new loans and the strength of the overall portfolio has never been better."

The corporation said 87 per cent of the loans it granted in 2011-2012 were to farmers.

The finance department provided a brief statement when asked to explain the reasons for the risk assessment, simply calling it a responsible, prudent and routine action that is part of proper oversight.

Last year the federal government placed the Canada Mortgage and Housing Corp. under the authority of OSFI because of its growing role in the financial sector.

— By John Cotter in Edmonton