BMO office on the northwest corner of King St. West and Bay St. in Toronto's financial district.Fred Lum
Bank of Montreal is on track to generate higher revenue this year from its investment banking business in the United States than in Canada.
In the first three quarters of fiscal 2017, BMO has generated 60 per cent of its investment banking revenue in the U.S. and 40 per cent in Canada, Patrick Cronin, the head of BMO Capital Markets, said this week at a conference hosted by CIBC.
BMO is making a push to grow its capital-markets franchise in the U.S., where it is targeting corporate clients in the mid-market across certain sectors, such as health care, real estate and energy. The Canadian market is much more mature by comparison and banks are largely trying to defend their market share.
BMO's strategy is paying off in 2017. The bank has seen the fees it earns from equity and debt underwriting and advisory work jump 45 per cent to $785-million during the first three quarters of the year from the prior year.
Mr. Cronin says that the bank is making progress with institutional-investor clients in the U.S., too. He added that many of these relationships begin with BMO selling them a derivative product called a total-return swap.
"It's a really powerful lever for us with our clients," he said on Thursday at the conference.
"This is the door-opener and the driver for other ancillary [business] with our investor clients."
But BMO isn't the only one reaping the benefits of its U.S. exposure. Canadian banks that do more in the U.S. are doing better in underwriting and advisory than banks that aren't. Royal Bank of Canada has increased its underwriting and advisory fees by 17 per cent so far this year, whereas Canadian Imperial Bank of Commerce and National Bank of Canada are both down 2 per cent in this category.