TORONTO (Reuters) – The U.S. economy was showing signs of stronger-than-expected growth, with California a strategically important market, said the head of Bank of Montreal, which has rapidly expanded its operations in its southern neighbor.
CEO Darryl White, addressing shareholders at the bank’s annual meeting, said the bank is well positioned to serve customers between the U.S. and Canadian economies in a changing global environment.
BMO, Canada’s third-largest bank by market capitalization, generates about a third of its revenue in the United States after acquiring Bank of the West for $16.3 billion last year, the largest deal in Canadian banking history.
He said trade and investment between Canada and the United States is key to economic competitiveness, noting it is one of the largest bilateral trading relationships in the world.
“The relationship is significant. For context, just considering the Great Lakes region… (it) would be the third largest economy in the world, almost equal to that of Japan and Germany combined, and the region employs about a third of the American-Canadian population. combined workforce,” he said.
“Then add California, which has an economy almost twice the size of Canada, and you see the global impact this North-South partnership is having.”
Canadian banks are increasingly looking to expand their operations south of the border or in other parts of the world as domestic opportunities are limited in a saturated market.
White warned of the possibility of higher interest rates for longer as borrowing costs remain high and demand weakens. But when rates start to decline, the market could see “a new normal, an environment with fundamentally different characteristics than the last two decades,” he said.