Canada’s three largest banks, all with catchy acronyms – Royal Bank of Canada (RBC), Toronto-Dominion (TD) and Bank of Montreal (BMO) – already have significant operations in the US. But thanks to a strong loonie backed by an oil-driven economic boom and a government that’s keen on keeping them from merging with one another, Canadian banks are looking southward for expansion.
RBC Centura Banks, the outpost of RBC in the Southeast, recently finalized a $1.6 billion acquisition of Alabama National BanCorporation last week and announced that it is dropping Centura from its name to ally itself more closely with its parent company. RBC is also buying US-based investment bank and brokerage Ferris, Baker Watts. Meanwhile, BMO’s US banking arm, Harris Bankcorp is putting the finishing touches on deals to buy two banks in the Milwaukee area, Merchants and Manufacturers Bancorporation and Ozaukee Bank. It is believed Harris is looking at other possible acquisition targets elsewhere in Midwest, as well as in Arizona and Florida (for snowbirds).
TD, which operates TD Banknorth in the Northeast and owns 40% of online brokerage TD Ameritrade, is making the biggest splash, shelling out some $8.5 billion for New Jersey-based Commerce Bancorp. The deal will extend TD Banknorth’s network southward to New York City and into Virginia and Florida. Commerce founder and former CEO Vernon Hill, who was staunchly against selling the company before he left it last summer, cut his teeth in the fast food business and applied similar concepts of quickness and convenience to banking. Because of this, Commerce has developed sort of a cult following in the industry – and among its clients. It will be interesting to see if TD can integrate Commerce’s operations without alienating its loyal customer base.
Even if Canadian banks aren’t expanding here, their fates are inexorably linked to the US economy. Canadian Imperial Bank of Commerce (CIBC), that country’s fourth largest bank, reported Thursday that it lost nearly $1.5 billion in the November to January quarter, due to — what else? — the lousy residential mortgage market.