All Canadian bank investors know that expansion into the U.S. personal and commercial (“P&C”) banking sector remains the focal point of capital deployment for the Canadian banks. In fact, US banking has been – by far – the largest destination of capital deployment since 2004 (when TD Bank acquired a majority stake in Banknorth), with the Canadian banks having spent a huge US$30 bln.

The chart below shows when, where and the size of the U.S. banks acquired in the last 15 years (in brackets, price paid, total assets)[1].

Attractive yield

As shown, TD Bank has been – by far – the most aggressive, spending ~US$17 bln in the past 15 years, expanding its platform along the east coast. Bank of Montreal, spending closer to US$5 bln, has continued to build out its long-standing Chicago-based Harris Bank, while CIBC spent a similar amount to enter the U.S. P&C market with its 2016 purchase of Private Bancorp.

Over this same period, RBC built on its North Carolina-based Centura platform (acquired in 2001), spending US$2 bln in 2006/2007 before divesting the entire platform in 2011 (for $3.6 bln). RBC then re-entered the U.S. in 2015 with the acquisition of the far superior, wealth management-driven, Los Angeles-based City National, spending over US$5 bln.

However, since 2016, the Canadian banks’ inorganic expansion into U.S. P&C has dwindled, with no activity. Meanwhile, sector M&A has picked up. We discuss why we believe U.S. bank M&A will continue to rise in One Chart: U.S. Bank M&A Doubles in 2019 (and Why We Expect More).


[1] This list consists of significant ($1 billion+ in assets) continental U.S. P&C banking acquisitions only. Price and assets are as at announcement date and in U.S. dollars.

Related Insights

U.S. Bank M&A: Another Accretive MOE, Another Positive Market Reaction (November 6, 2019)

What U.S. Investment Bankers and Banks are Saying about M&A (September 23, 2019)

U.S. Bank M&A: 8 Drivers as Described by Rodgin Cohen (May 29, 2019)

Canadian Banks: Five Takeaways from BBT/STI, Accelerating U.S. Bank M&A  (February 11, 2019)

A word on trading liquidity for ETFs 

Hamilton ETFs are highly liquid ETFs that can be purchased and sold easily. ETFs are as liquid as their underlying holdings and the underlying holdings trade millions of shares each day.

How does that work? When ETF investors are buying (or selling) in the market, they may transact with another ETF investor or a market maker for the ETF. At all times, even if daily volume appears low, there is a market maker – typically a large bank-owned investment dealer – willing to fill the other side of the ETF order (at net asset value plus a spread). The market maker then subscribes to create or redeem units in the ETF from the ETF manager (e.g., Hamilton ETFs), who purchases or sells the underlying holdings for the ETF.

Hamilton ETFs:

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