Brian Porter, president and CEO of Scotiabank, addresses the company's annual meeting in Calgary, Tuesday, April 12, 2016. THE CANADIAN PRESS/Jeff McIntosh

Canadian banks look to U.S. for growth amid strong economic recovery

Canadian banks look to U.S. for growth amid strong economic recovery

TORONTO — Canadian bank CEOs say they are looking to grow their U.S. operations as the country shows a strong economic rebound from the COVID-19 pandemic.

Scotiabank CEO Brian Porter, speaking Thursday at the bank’s virtual Financials Summit, said the country was showing a stronger rebound than other markets Scotiabank operates in like the Caribbean and Latin America.

“The economic recovery isn’t even around the globe, as we all know. Clearly the U.S. is leading the pack.”

He said that Canada wasn’t far behind, though in the second quarter the U.S. recorded GDP growth of 6.6 per cent, while Canada’s GDP saw a revised dip of 0.3 per cent.

Porter said Scotiabank is looking to expand its U.S. wealth business through an acquisition, though he said it wouldn’t be sizable dollar-wise.

“The one piece of the business we’d like to add over time is a bigger U.S. presence in terms of our wealth business.”

RBC CEO Dave McKay said the bank is looking to use its base in the U.S. to tap into the potential $60 billion to $70 billion of mid-sized corporate revenue up for grabs in lending and transactions.

The bank will use its base of City National Bank, the Los Angeles-based operation it acquired in 2015, plus its U.S. Wealth and Capital Markets segments to snag both corporate and high net-worth clients.

“We aspire to acquire a number of new clients through those channels…these are all growth vectors for us in a very large, but competitive, profit pool.”

BMO chief executive Darryl White said the bank continues to expand its capacity in the U.S. so that when excess liquidity from government programs wind down, the bank will be ready for growth.

“We’re opening new businesses in commercial (banking) in places like Florida, like Texas, like Colorado as recently as a couple of weeks ago.”

TD Bank CEO Bharat Masrani also said that more growth will come in the U.S. once programs like the Paycheck Protection Program wind down.

“Once all this extraordinary fiscal and monetary side clears off, we’re feeling very happy as to where we’re headed.”

He said that with more than 10 million clients, TD already has a strong presence to grow organically, but they’re still looking to grow their wealth management offerings, and he wouldn’t rule out more mergers and acquisitions.

“There’s a huge amount of potential there, and if there is a way that M&A might accelerate our growth aspirations, of course we should look at it seriously.”

CIBC chief executive Victor Dodig said the bank has expanded in the U.S. with several acquisitions in recent years, including Wellington Financial in 2018 to launch its innovation banking division for tech clients.

The bank has reorganized it innovation banking division to merge the Canadian and U.S. sections into a single cross-border entity as it chases the huge flows of capital into the space.

“We are seeing really good growth in the technology space. We’re emerging as a leader in Canada, and we have a good footprint in the U.S. from Silicon Valley right through to Boston,” said Dodig.

The bank also bought a Chicago-based bank for almost $5 billion in 2017, as well as made several wealth management acquisitions in recent years.

Dodig said that in seven years the U.S has gone from representing less than five per cent of the bank’s revenue to approaching 21 per cent.

He said the bank’s target is around 25 per cent of revenue from the U.S., and CIBC is looking for organic growth as it expands commercial banking to markets like New York, California and Texas, and adds private banking capabilities in 15 markets including plans to roll out storefront private banking over time

“We’re really pleased with the investments in the U.S.,” said Dodig.

This report by The Canadian Press was first published Sept 9, 2021.

Companies in this story: (TSX:BNS, TSX:RY, TSX:TD; TSX;BMO, TSX:CM)

Ian Bickis, The Canadian Press