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M&T Opens Commercial Office in Toronto

By Jonathan D. Epstein

June 08, 2010

 M&T Bank Corp. said Monday that it is opening a commercial banking office in downtown Toronto — its first such international office—to offer banking services to Canadian businesses.

The Buffalo-based bank, one of the nation’s top 20, said it received approval from the Office of the Superintendent of Financial Institutions Canada to open the office at 161 Bay St.

The bank will offer deposit and loan products to businesses, in both U. S. and Canadian dollars. But it will not provide retail banking services, and the office will not be a retail branch, officials said.

“Canada has a robust economy and a strong trade relationship with the U. S., with a large amount of that trade flowing across the Ontario-New York border,” M&T Bank President Mark J. Czarnecki said.

“M&T has been headquartered on the border for more than 150 years, and our understanding of cross-border commerce, along with decades of experience serving Canadian businesses operating in the U. S., makes Ontario an ideal location for M&T’s first international commercial bank office.”

M&T’s office in the Cayman Islands is part of its trust business, not commercial or retail banking.

“It’s kind of about time,” said Brian Hickey, executive vice president and upstate area executive for M&T. “We see a tremendous opportunity to take advantage of what is a very familiar relationship between Canada and the U. S., and we think we can do a better job of that being right there in Canada.”

M&T already has provided banking services for U. S. operations of Canadian companies for more than 100 years, the bank noted. With the new office, it can serve the Canadian-based headquarters and parent companies, while also providing products and services to U. S. businesses in Canada.

“We already have a good customer base of Canadian companies that do business in the U. S.,” said Chet Bridger, bank spokesman. “This allows us to provide services on the other side of the border.”

The office will be run by John R. MacLeod, a 30-year veteran of Canadian commercial banking, as Canadian principal officer. The bank also will hire a relationship manager in Toronto and expects to move someone from Buffalo. It will also employ customer service staff.

The operation has been legally open since May 18, the date of the government order. But the actual office is still being set up, and officials are “putting the finishing touches” on it, including arrangements to handle deposits, Hickey said.

Canadian law requires banks taking deposits to process the work in a way that would require M&T to have more infrastructure in its Canadian operation. “For us to do that at this point with one office is just not practical,” Hickey said.

So instead, M&T is using Royal Bank of Canada, Canada’s largest financial institution, to open accounts and process deposits “for the time being,” he explained. That’s a typical arrangement for foreign banks operating in Canada, which has only 24 banks nationwide and is dominated by the five largest.

“We’ll see how fast our office grows and at some point in the future, we can consider establishing more back-office operations,” Hickey said.

M&T has no plans for additional commercial offices or a retail bank. “I think we’re committed to making this office work, but it would be too early to speculate where it would go,” Hickey said. “If it takes off the way we would hope, we would certainly consider additional offices. But in the traditional M&T way, it’s one step at a time.”

In the meantime, though, M&Tcan call on businesses and make loans in Canada. Officials will start by reaching out to Canadian firms that already do business with M&T through their U. S. affiliates. Many are in the Northeast, especially in New York, Pennsylvania and Maryland, “which matches up with our footprint pretty well,” Hickey said.

That list includes more than 150 Canadian firms, with about $200 million in loans or lines of credit at M&T and about $80 million in deposits. The bank also will target U. S. business customers that have operations in Canada—about another 200 or so, Hickey said — and “attempt to take deposits and make loans for them.”

The next step will be to call on any middle-market Canadian company in southern Ontario, including the Toronto, St. Catharines, Hamilton, Fort Erie and Niagara Falls areas. The bank will target companies with revenues of $10 million to $1 billion.

That will bring it into competition with RBC and the four other big Canadian banks — CIBC, Bank of Montreal, Bank of Nova Scotia and Toronto-Dominion Bank. Along with HSBC Bank Canada, they control 95 percent of the nation’s market. But that’s also where M&T believes “we’ve got a unique opportunity,” Hickey said.

“If you look at the Canadian marketplace, there aren’t too many banks up there, and the banks that are up there are enormous,” he said. “We think there’s an opportunity with our relationship-driven banking approach to come in under their radar and call on customers.”

e-mail: jepstein@buffnews.com