BMO Capital Markets is Canada’s best investment bank this year, rewarding the momentum that has propelled it up the advisory and equity capital markets league tables while also gaining ground in debt capital markets.
BMO Financial Group – ‘Boldly grow the good, in business and in life,’ as its mission statement dramatically asserts – achieves a quarter of its net revenue from its capital markets division. Reported net income almost exactly doubled in 2021 year on year to C$2.14 billion ($1.66 billion) for the division, supported by a well-diversified platform and business mix by sector, geography, product and currency.
Key deals during the review period included a C$5 billion debut green bond from the Canadian sovereign, a host of covered bonds in a big year for that sector and a Maple bond issue for Morgan Stanley. A big equity capital markets role was the high-profile and upsized $1 billion equity financing of Algonquin Power, the proceeds of which will be used for investments in renewable energy. Bigger still were equity capital raisings for Bank of Montreal and Definity Financial Corp.
In advisory, among the biggest Canadian deals were the acquisition of Kansas City Southern by Canadian Pacific in a $27.2 billion cash-and-stock deal; BMO’s own sale of its US retail and commercial banking activities, through Bank of the West, to BNP Paribas; and Brookfield Infrastructure Partners’ acquisition of Inter Pipeline.
BMO’s longstanding expertise in metals and mining banking – its Global Metals & Mining Conference, which just enjoyed its 31st iteration, is an industry landmark – is as robust as ever. But BMO Capital Markets chief executive Dan Barclay has tried to impress upon the bank the opportunities that energy transition presents, which will surely impact BMO’s client base more than most.
Resource-heavy Canada has a more painful journey than many to zero carbon, but it does present an opportunity for a forward-looking advisory practice. The division has set up an energy transition group and is already ranked first in Canadian sustainable bond underwriting.
The inaugural BMO Women in Business bond offering was the first of its kind in Canada, with proceeds allocated to women-owned business lending.
According to data from Dealogic, BMO climbed from second to first in Canadian ECM in 2021, from 11th to fourth in M&A and from fourth to third in DCM. No other big enterprise in Canadian investment banking shows such an across-the-board sense of momentum.
BMO Capital Markets is emerging from the pandemic as a stronger, more efficient and better-integrated organization
BMO Capital Markets
Its global markets division is also gathering strength, with the 2020 acquisition of Clearpool Group now bedded in, doubling BMO’s algorithmic trading market share in Canada. A partnership with Riskfuel Analytics aims to deliver artificial intelligence solutions to support clients in investment decisions.
In 2021, the global markets division outgunned investment and corporate banking in terms of revenues, bolstered by equities trading.
“BMO Capital Markets is emerging from the pandemic as a stronger, more efficient and better-integrated organization,” the bank told shareholders at the year’s end.
