Canada banks carve into weak­ened US mar­ket

The Pak Banker - - Front Page -

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

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