TD on deal hunt after BancWest bid as Canadian lenders pursue U.S. growth | Canada News Media
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TD on deal hunt after BancWest bid as Canadian lenders pursue U.S. growth

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Toronto-Dominion Bank is leading the charge of cash-rich Canadian banks seeking to make a foray in the United States and find growth away from their home turf where the Big Six banks already control nearly 90% of the market.

Billions of dollars of excess cash amassed during a nearly two-year moratorium on capital redistributions that was only lifted last month, and share prices close to record highs have given Canadian banks an acquisition currency to bet on the exit and downsizings of several European and international banks.

The sale of BNP Paribas’ U.S. unit, Bank of the West (BancWest), is the latest example of pent-up demand, with Toronto-Dominion Bank battling it out with rival Canadian lender Bank of Montreal, two sources familiar with the matter said.

Bank of Montreal said on Monday it will buy BNP Paribas’ unit, Bank of the West, for $16.3 billion in its biggest deal ever.

TD, Canada’s second-largest bank by market value, had looked at every major asset portfolio that came up for sale, including the U.S. businesses sold by Mitsubishi UFJ (MUFG) in September and BBVA in November 2020, the sources said.

It remains on the hunt for acquisitions in the United States after its narrow loss to BMO.

TD and BMO spokespersons did not comment on the bidding process or future growth plans in the United States. MUFG declined comment on the Canadian banks’ interest in their assets and BBVA did not immediately respond to a request for comment.

“Banking is a scale, technology and sophistication game,” said Brian Madden, portfolio manager at Goodreid Investment Counsel.

He added that Canadian banks already in the United States are well placed to scale up their U.S. operations since they “happen to be directly adjacent to the largest banking market on the planet.”

TD executives said earlier this year that the bank “will not be shy” to do a bank deal in the U.S. Southeast or in any area where it currently has operations, primarily on the East Coast.

Having missed out on some big acquisitions, TD is now likely to turn its attention to smaller banks, one of the sources said.

Along with TD and BMO, Royal Bank of Canada, Canadian Imperial Bank of Commerce (CIBC), Bank of Nova Scotia and National Bank of Canada round out Canada’s Big Six banks.

TD is one of the top 10 banks in the United States, and Royal Bank owns City National, the ninth-largest bank in California by deposits.

Royal Bank has also been undergoing U.S. expansion, although Canada’s biggest lender is more focused on its wealth management https://www.reuters.com/article/us-rbc-wealth-idUSKBN25U1I6 business in the United States.

And CIBC, which entered the United States in 2017 with its acquisition of PrivateBancorp, has said it is aiming for increased earnings from the country in the coming years.

Royal Bank did not respond to a request for comment. CIBC declined to comment.

BMO’S CHASE

BMO had pursued BancWest after losing out on the U.S. retail business of MUFG, Japan’s biggest lender, one of the sources said. MUFG ended up selling its U.S. retail business to U.S. Bancorp for $8 billion.

BMO made a competitive bid for MUFG’s assets, and its disappointment at losing out propelled Canada’s fourth-largest bank to move fast on the BancWest sale, the source said.

BNP Paribas, advised by Goldman Sachs and JPMorgan, entered parallel discussions with both TD and BMO, raising pressure on both bidders to finalise their offers as it fretted that regulatory headwinds could hamper the sale, the sources said.

BNP Paribas did not respond to a request for comment.

While TD initially made a low bid and subsequently raised it, BMO was more aggressive with its first proposal and was quick at declaring its offer “best and final” in December after offering a final sweetener, one of the sources said.

The deal will make BMO the 16th biggest bank by assets in the United States, up from 19th now, and lifts its assets to nearly $300 billion.

By merging with U.S. rivals, Canadian banks with an existing U.S. presence are expected to extract better returns from these businesses than smaller players, even when they appear to pay a premium as BMO did for BancWest, said Anthony Visano, portfolio manager at Kingwest & Co.

“Sometimes the strategic value trumps the financial consideration,” Goodreid Investment’s Madden said.

 

(Reporting by Pamela Barbaglia in London and Nichola Saminather in Toronto; Editing by Megan Davies and Matthew Lewis)

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Cineplex reports $24.7M Q3 loss on Competition Tribunal penalty

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TORONTO – Cineplex Inc. reported a loss in its latest quarter compared with a profit a year ago as it was hit by a fine for deceptive marketing practices imposed by the Competition Tribunal.

The movie theatre company says it lost $24.7 million or 39 cents per diluted share for the quarter ended Sept. 30 compared with a profit of $29.7 million or 40 cents per diluted share a year earlier.

The results in the most recent quarter included a $39.2-million provision related to the Competition Tribunal decision, which Cineplex is appealing.

The Competition Bureau accused the company of misleading theatregoers by not immediately presenting them with the full price of a movie ticket when they purchased seats online, a view the company has rejected.

Revenue for the quarter totalled $395.6 million, down from $414.5 million in the same quarter last year, while theatre attendance totalled 13.3 million for the quarter compared with nearly 15.7 million a year earlier.

Box office revenue per patron in the quarter climbed to $13.19 compared with $12 in the same quarter last year, while concession revenue per patron amounted to $9.85, up from $8.44 a year ago.

This report by The Canadian Press was first published Nov. 6, 2024.

Companies in this story: (TSX:CGX)

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Restaurant Brands reports US$357M Q3 net income, down from US$364M a year ago

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TORONTO – Restaurant Brands International Inc. reported net income of US$357 million for its third quarter, down from US$364 million in the same quarter last year.

The company, which keeps its books in U.S. dollars, says its profit amounted to 79 cents US per diluted share for the quarter ended Sept. 30 compared with 79 cents US per diluted share a year earlier.

Revenue for the parent company of Tim Hortons, Burger King, Popeyes and Firehouse Subs, totalled US$2.29 billion, up from US$1.84 billion in the same quarter last year.

Consolidated comparable sales were up 0.3 per cent.

On an adjusted basis, Restaurant Brands says it earned 93 cents US per diluted share in its latest quarter, up from an adjusted profit of 90 cents US per diluted share a year earlier.

The average analyst estimate had been for a profit of 95 cents US per share, according to LSEG Data & Analytics.

This report by The Canadian Press was first published Nov. 5, 2024.

Companies in this story: (TSX:QSR)

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Electric and gas utility Fortis reports $420M Q3 profit, up from $394M a year ago

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ST. JOHN’S, N.L. – Fortis Inc. reported a third-quarter profit of $420 million, up from $394 million in the same quarter last year.

The electric and gas utility says the profit amounted to 85 cents per share for the quarter ended Sept. 30, up from 81 cents per share a year earlier.

Fortis says the increase was driven by rate base growth across its utilities, and strong earnings in Arizona largely reflecting new customer rates at Tucson Electric Power.

Revenue in the quarter totalled $2.77 billion, up from $2.72 billion in the same quarter last year.

On an adjusted basis, Fortis says it earned 85 cents per share in its latest quarter, up from an adjusted profit of 84 cents per share in the third quarter of 2023.

The average analyst estimate had been for a profit of 82 cents per share, according to LSEG Data & Analytics.

This report by The Canadian Press was first published Nov. 5, 2024.

Companies in this story: (TSX:FTS)

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