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Financial institutions and Wall Street investors have had subprime on the brain over the past several months. And for a good reason. But Canadian financial institution BMO FinancialBMO, known also as Bank of Montreal, proves that the tried-and-tested wrong-way bet on natural gas can cause just as much sacre bleu. The Toronto-based bank has revealed that it took a loss of 350 million to 450 million Canadian dollars, or $313 million to $404 million, from natural gas trading. Similar bets last year took down Amaranth Advisors, the onetime haunt of trader Brian Hunter, as well as hedge fund MotherRock, run by Bo Collins. Heads might be rolling. CEO Bill Downe described the losses as unacceptable. In a statement, the chief said "commodity trading losses were the result of decisions that did not adequately recognize the vulnerability of the portfolio to changes in market volatility." BMO said the losses will be recorded on pretax basis in the second quarter of its 2007 fiscal year. The impact of this to BMO Financial Group's second-quarter earnings, which will be announced on May 23, estimated in the range of 45 cents to 55 cents per share. "We are conducting a thorough review and actions have been taken to address the current situation and reduce the likelihood of a recurrence," Downe said in a statement.
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