Outperforming their American rivals these days -- thanks to the U.S. credit crisis -- Canada's banks are on the prowl for acquisitions south of the border -- but don't expect them to ride to the aid of troubled U.S. banks. Reuters reported Wednesday that Royal Bank of Canada, the country's largest lender, is cautiously eyeing the M&A landscape to the south, though it is not interested in buying an investment or corporate bank, but rather wealth management and private banking.
Continue reading below
"Yes, we are interested in being an opportunistic buyer, but not in the capital markets side of the business," RBC president and CEO Gordon Nixon told a Canadian financial services conference in Toronto. Although RBC is primarily looking at wealth managers, Nixon added, however, that banks are always considering large, transformational deals.
Reuters also said that the No. 3 Canadian bank, Bank of Nova Scotia, is interested in buying wealth managers and wouldn't balk at paying a steep price for the right one. Chris Hodgson, executive vice president and head of domestic personal banking, said that in recent years the bank has been looking to expand its funds management business through a "transformational" deal.
Canadian banks have so far weathered the credit crisis pretty well, largely because their domestic businesses are robust. The Canadian housing market has shown remarkable resilience, and the banks' corporate lending is doing well because of the global commodity boom. Despite the strength, the S&P/TSX Capped Financials Index in Canada has fallen about 18% in the past year while the NYSE Bank Index has fallen about 22%.
One bank that is avoiding an acquisition is Canadian Imperial Bank of Commerce, which has suffered through billions of dollars of write-downs and will likely conserve cash for now.
"As long as the environment remains as uncertain, balance sheet strength will be very important to us," CEO Gerry McCaughey said, according to The Globe and Mail. - Peter Moreira
See story from The Globe and Mail's Report on Business
See story about Scotia Bank from Reuters via The Globe and Mail
See story about RBC from Reuters via The Globe and Mail
