Management’s Discussion
and Analysis

BMO Capital Markets

BMO Capital Markets provides a full range of products and services to help corporate, institutional and government clients achieve their ambitions. From 26 offices on five continents, including 14 in North America, BMO Capital Markets draws on expertise in areas including equity and debt underwriting, corporate lending and project financing, mergers and acquisitions, merchant banking, securitization, treasury and market risk management, foreign exchange, derivatives, debt and equity research and institutional sales and trading.

BMO Capital Markets Operating Group Review (PDF 216 KB)

Image of Tom Milroy

“Our clients remain at the core of our long-term strategy, and our performance and progress in fiscal 2010 demonstrate that we have the right plan in place to deliver.”

Tom Milroy
Chief Executive Officer
BMO Capital Markets


Our Strategies

  • Build out our distribution platform, primarily in the United States, to create a more focused and integrated capital markets business.
  • Align capital and capabilities to client opportunity with a focus on core clients, a diversified, dynamic portfolio of businesses and strong risk management capabilities.
  • Focus on strategic sectors, while building the capability to further extend BMO Capital Markets’ offering.

Our Path to Differentiation

  • A successful, stable and trustworthy North American universal banking model.
  • Leading expertise and relationships in strategic sectors and products (such as the Natural Resources sector and Research and Structured Products) that facilitate client acquisition.
  • In the United States, a unique opportunity to capitalize on reduced competition from full-service banks in the mid-capitalization space, serving these clients with an integrated offer and strong balance sheet.
  • Strong risk management practices, facilitating optimal risk/return balance.
Key Performance Metrics and Drivers 2010 2009 2008

(1) Canadian corporate issuers in North America.

(2) Based on current loans.

(3) Brendan Wood International survey.

(4) Source: BMO Annual Employee Survey, conducted by Burke Inc., an independent research company.

Trading Products revenue ($ millions) 2,040 2,018 1,020
Investment and Corporate Banking revenue ($ millions) 1,239 1,071 1,158
Equity underwriting participation (deals) (1) 213 226 140
Debt underwriting participation (deals) (1) 134 115 121
Average loans and acceptances ($ billions) (2) 25.4 34.9 30.8
Canadian equity research ranking (3) #2 #1 #1
Employee engagement index (%) (4) 71 70 66

Strengths and Value Drivers

  • Diversified, dynamic portfolio of businesses that supports our well-established franchise.
  • North American expertise providing an integrated cross-border market experience, combined with select strategic presence internationally.
  • Expertise and leadership in targeted sectors and products such as the Natural Resources sector and Retail Investor Products.
  • Top-tier equity research, sales and trading capabilities.
  • Significant North American investment and corporate banking presence.

Challenges

  • Evolving regulatory requirements.
  • Ongoing market volatility and economic uncertainty.

Our Lines of Business

Investment and Corporate Banking services include strategic advice and execution on mergers and acquisitions, restructurings and recapitalizations, as well as valuation and fairness opinions. We provide capital-raising services through debt and equity underwriting as well as a full range of loan and debt products, balance sheet management solutions and treasury management services. In support of our clients’ international business activities, we offer trade finance and risk mitigation services. We also provide a wide range of banking and other operating services to North American and international financial institutions.

Trading Products services include sales, trading and research activities. We offer integrated debt, foreign exchange, interest rate, credit, equity, securitization and commodities solutions to institutional, commercial and retail clients. In addition, we provide new product development, proprietary trading and origination services to our clients. We also supply efficient funding and liquidity management to our clients, including BMO Financial Group.

Caution

This BMO Capital Markets section contains forward-looking statements. Please see the Caution Regarding Forward-Looking Statements.

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