Canadian financial institutions have big advantages when it comes to attracting wealthy investors. Strong balance sheets, a generally stable currency, good relations with regulators and a domestic economy rated the world’s soundest for six straight years by the World Economic Forum would seem to make them an international force in wealth management. Despite these virtues, Canadian banks have been relatively slow to build their private client franchises outside North America. But there are signs of change.
The largest of the country’s Big Five banks and the No. 5 wealth manager worldwide, with C$442 billion ($393 billion) under management, Royal Bank of Canada has the greatest global footprint of major Canadian financials. Expanding the C$896 billion bank’s private client business in the U.S., where it runs the No. 8 full-service brokerage by adviser head count, is a top priority, says George Lewis, Toronto-based group head of RBC Wealth Management and RBC Insurance.
“Outside of North America, we are focused particularly on clients from high-growth emerging markets,” Lewis adds. The acquisition of London-based, $65.8 billion BlueBay Asset Management in 2010 extended RBC’s presence in Europe and Asia. “We see particular opportunities to grow our business in Asia, where we have made a number of hires to our Singapore- and Hong Kong–based teams,” Lewis says.
Bank of Montreal, Canada’s fourth-largest bank, has also concentrated on raising its U.S. wealth management profile over the past decade. In 2010, BMO purchased Chicago-based Harris Bank; rebranded as BMO Harris Bank, the unit serves Silicon Valley families under the Harris myCFO banner.
Private banking growth outside North America has gathered steam for Toronto-headquartered, C$587 billion BMO in recent years. The acquisition of Hong Kong–based Lloyd George Management in 2011 provided a beachhead for expansion to Asia, as did the purchase of the Asian wealth management arm of hometown rival Canadian Imperial Bank of Commerce. “We’ve been focused on building a full team of seasoned relationship managers who have a strong understanding of the private banking market and of the banking and investment management needs of high-net-worth individuals in the Asia-Pacific region,” says Barry McInerney, co-CEO of BMO Global Asset Management.
RBC and BMO will continue to be the two major Canadian banks with the most aggressive international expansion strategies, predicts Peter Routledge, a Toronto-based financial services analyst at investment bank National Bank Financial: “It’s a good business, and they know that they have the right brands.”
Two of the other Big Five, C$847 billion Toronto-Dominion Bank and C$405 billion CIBC, have kept their wealth management business almost entirely in Canada and the U.S. No. 2–ranked TD has an online retail banking foothold in the U.K., but so far, neither it nor fifth-place CIBC has hinted at plans to reach superwealthy investors in new markets. CIBC’s 2007 sale of its Asian private banking operation underscores its local focus.
Canada’s No. 3 bank takes perhaps the most intriguing approach to global expansion. Rather than seek a broad foreign retail audience like TD or court the very rich abroad like RBC, in the past few years, Bank of Nova Scotia has targeted the rising middle class in markets where it enjoys long-standing brand recognition. With branches in 55 countries, it has a legacy as a cross-Atlantic trade facilitator that gives it commercial lending roots in South America and the Caribbean. NBF’s Routledge says C$792 billion Scotiabank’s retail operations in Chile, Colombia, Mexico and Peru could provide a unique launchpad for a push into ultrahigh-net-worth markets: “RBC largely pulled back from South America and refocused on Europe and the U.S., signaling the potential difficulty of engaging wealthy clients without an established name brand.” • •