Richard Florida
by Richard Florida
Tue Oct 6th 2009 at 4:49pm UTC

Toronto Rising

This headline over at Bloomberg today – “Wall Street Cedes to Toronto’s Bay Street” – sure caught my attention. Here’s the gist.

Henry Michaels spent 25 years as an investment banker with New York-based firms such as Merrill Lynch & Co., Lehman Brothers Holdings Inc. and Citigroup Inc. When the financial crisis deepened this year, he abandoned the struggling U.S. companies for a job at Royal Bank of Canada.  “In this crisis, strength and stability matter,” said Michaels, 48, who resigned as co-head of Citigroup’s banks and diversified financials group in May to join RBC Capital Markets in New York. “RBC is in growth mode, and it’s nice to be playing offense.”

Canadian banks, bolstered by their reputation as the world’s soundest, are adding investment bankers even after rivals slashed almost 316,000 jobs worldwide since the collapse of the U.S. subprime market in 2007, according to data compiled by Bloomberg.

Lenders including RBC, BMO Capital Markets and CIBC World Markets have hired more than 700 investment bankers, analysts and traders in the U.S. and Canada this year, including from rivals such as Goldman Sachs Group Inc., Morgan Stanley, Merrill Lynch and Citigroup.

“The profile of the Canadian banks on the global scale has been heightened exponentially over the course of the last year,” said Rose Baker, a managing partner in Toronto with executive recruitment firm Heidrick & Struggles International Inc. “They look more powerful and are able to attract talent that was historically not available to them.”

Canadian lenders, based in Toronto’s financial district known as Bay Street, have remained profitable amid the crisis because of tighter restrictions on lending and higher capital requirements. As a result, Canada’s biggest banks posted about $20.4 billion in writedowns and credit losses since 2007, a fraction of the $1.62 trillion taken by global financial- services firms in the period, according to data compiled by Bloomberg. The World Economic Forum last month named Canada as home to the world’s soundest banks for the second straight year.  The resilience allowed the Canadian lenders to climb the ranks of global firms. Three Canadian banks now rank in the top 10 among North American lenders by market value.

Canadian banks are taking on experienced bankers as larger firms trim ranks. North American banks and brokerages cut 9.9 percent of their workforce in the past two years, according to Bloomberg data. Bank of America Corp. eliminated 46,150 jobs, while Citigroup cut 38,900 positions and Lehman fired 13,390 employees.  By comparison, Canada’s five biggest banks pared 3,135 jobs, or about 1.1 percent of their staff, in areas such as consumer banking, according to company filings.

With its housing market on the mend and its ability to attract global talent growing, Toronto seems poised to come out of the Great Reset in much better shape than anyone could have expected.

4 Responses to “Toronto Rising”

  1. Wendy Waters Says:

    A year ago, there was so much fear in Toronto and Ontario of a repeat of the 1990s. Here we are a year later, and Toronto is on top.

    In the 1990s, there was a lot of pain, but it was restructuring pain in the Toronto financial sector, helping to pave the way for this resiliency to global downturn.

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