Canada banks carve into weakened US market
MONTREAL: Rich and eager to expand after weathering the global economic storm, Canada's top banks are finding a wealth of investment targets in the United States, where the recovery has lagged.
The latest evidence came this week as Toronto-Dominion (TD) Bank moved to buy once-bankrupt Chrysler Financial for 6.3 billion dollars. Even before the deal, TD was one of the 10 largest banks operating in the United States, with some 6.5 million customers. It is now set to become one of the top five bank-owned auto lenders in North America, allowing it to tap a massive market.
"This transaction represents a unique opportunity to purchase a great organic growth platform at an attractive price," said Ed Clark, group president and chief executive officer of TD.
Earlier this year, TD said it would buy troubled US lender South Financial Group for some 192 million dollars to expand its footprint in the southeast United States.
But TD is not the only Canadian bank looking to spread its wings.
The deal came just days after the Bank of Montreal (BMO) doubled its stake in the US banking market with the purchase of Marshall & Ilsley for 4.1 billion dollars in stock.
"There is a short-term conjuncture, with the weakness of the US banks and the strength of the Canadian dollar, that encourages (banks) to take over financial institutions in the United States, which is after all the world's biggest market," said Bernard Elie, an economics professor at the University of Quebec at Montreal (UQAM).
"The second there is something on sale in the United States, the Canadian banks go for it," he said. "The Canadian banks are among the largest in the world with more than three trillion dollars in assets," Elie said. -PB News