Annual Report 2016

Management’s Discussion and Analysis

BMO Capital Markets

BMO Capital Markets is a North American-based financial services provider offering a complete range of products and services to corporate, institutional and government clients. BMO Capital Markets has approximately 2,400 professionals in 30 locations around the world, including 16 offices in North America.

Image of Darryl White

Patrick Cronin
Group Head
BMO Capital Markets(1)

Darryl White
Chief Operating Officer
BMO Financial Group(1)

Lines of Business

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

Trading Products offers research and access to global markets for institutional, corporate and retail clients through an integrated suite of sales and trading solutions that include debt, foreign exchange, interest rate, credit, equity, securitization and commodities. We also offer new product development and origination services, as well as risk management (derivatives) advice and services to hedge against fluctuations in a variety of key inputs, including interest rates and commodities prices. In addition, we provide funding and liquidity management to our clients.


Strengths and Value Drivers

  • Unified coverage and integrated distribution across our North American platform and complementary global footprint, delivering a seamless and exceptional client experience.
  • Innovative ideas and tailored solutions delivered through a comprehensive coverage team, dedicated to anticipating, understanding and meeting client needs.
  • Top-ranked Canadian equity and fixed income economic research, sales and trading capabilities with deep expertise in core sectors.
  • Strong first-line-of-defence risk management and regulatory and compliance capabilities, enabling effective decision-making in support of our strategic priorities.
  • Well-diversified platform and business mix, by sector, geography, product and currency, positioning BMO well in several key markets and over the long term.

Strategy and Key Priorities

BMO Capital Markets aims to be a lead North American investment bank enabling clients to achieve their goals. We offer an integrated platform, differentiated by innovative ideas and unified coverage.

Continue to maintain our leadership position in Canada through our top-tier coverage team

2016 Achievements

  • Continued to win key mandates in core Canadian industries, including: as sole advisor on a $1.9 billion disposition by Paramount Resources, the largest non-oil sands upstream energy transaction of 2016; as advisor to Bell Canada Enterprises (BCE) on its pending $3.9 billion acquisition of Manitoba Telecom Services Inc.; and as lead of the largest unsecured operating line transaction in Canadian REIT history with RioCan.
  • Ranked #1 (tied) as a 2016 Greenwich Quality Leader in Overall Canadian Fixed Income, Canadian Fixed Income Sales, Canadian Fixed Income Research and Canadian Fixed Income Trading by Greenwich Associates.
  • Ranked #2 as a 2016 Greenwich Share Leader for Canadian Equity Trading Share by Greenwich Associates.
  • Ranked #2 (tied) as a 2016 Greenwich Share Leader for Overall Canadian Fixed Income Market Share by Greenwich Associates.
  • Ranked #1 (tied) by its clients as a Prime Broker in Canada in the 2016 Global Custodian Prime Brokerage Survey.
  • Named Best House in Canada for Structured Products at the 2016 Americas Structured Products & Derivatives Awards.
  • Named Bank of the Year at the annual Canadian Dealmakers Awards.

2017 Focus

  • Continue to maintain market leadership in Canada by deepening our client relationships and driving incremental market share growth.

Continue to drive performance in our U.S. platform with a focused strategy and selectively grow our U.S. corporate bank where we are competitively advantaged

2016 Achievements

  • Continued to leverage our full-service capabilities to gain competitive advantage against our U.S. mid-market and boutique competitors.
  • Acquired U.S. boutique M&A advisory business Greene Holcomb Fisher, complementing our existing M&A practice and aligning with our strategy of focusing in the mid-cap market space.
  • Ranked #3 by Ivy Exec as Best Large Investment Bank To Work For.
  • Continued to expand our lending and advisory mandates, including as financial advisor to Stone Canyon on its $2.4 billion acquisition of BWAY, as the joint lead arranger, joint bookrunner and administrative agent for Jones Lang LaSalle Incorporated’s US$2.75 billion Senior Credit Facility, and as financial advisor to Inland Real Estate Corporation on its US$2.3 billion sale to real estate funds managed by DRA Advisors LLC.
  • Closed 33 U.S. M&A transactions this year, up 22% from the prior year, with a total deal volume of $14 billion.
  • Continued to win significant cross-border mandates, including acting as financial advisor to Spectra Energy on its combination with Enbridge, the largest M&A deal in Canadian history, creating the largest energy infrastructure company in North America with an enterprise value of $165 billion.

2017 Focus

  • Continue to leverage our key strategic investments to increase growth from our U.S. platform, and selectively grow our U.S. corporate bank where we are competitively advantaged.

Leverage our strong North American capabilities and presence in select international markets

2016 Achievements

  • Built our presence in the Supranational Sub-sovereign Agency (SSA) market. Named a Coming Force in SSA Banking at the 2016 GlobalCapital Bond Awards and won key mandates, including acting as bookrunner and sole swap provider on a US$2.5 billion 5-year Fixed Rate Note deal by the International Finance Corporation.
  • Continued to expand lending and advisory mandates globally in the metals and mining sector, such as acting as financial advisor to Ivanhoe Mines in partnership with Zijin Mining on the co-development of the Kamoa, the world’s largest, undeveloped, high-grade copper discovery, in the Democratic Republic of Congo.
  • Named World’s Best Metals & Mining Investment Bank for the seventh consecutive year by Global Finance.
  • Issued BMO’s first Formosa bond in Taiwan, a $262 million U.S.-dollar-denominated 30-year structured note.
  • Named Best Bank for the Canadian Dollar for the sixth consecutive year by FX Week magazine.
  • Named Best Trade Bank in Canada at the 2016 Trade Finance Magazine Company Awards.
  • Named Best Forex Provider in North America for the sixth consecutive year by Global Banking and Finance Review.

2017 Focus

  • Continue to leverage our strong North American and global capabilities to deepen our presence and strategic relationships in select international markets.

Continue to enhance our first-line-of-defence risk management, regulatory and compliance practices

2016 Achievements

  • Continued to enhance our supervisory, risk management and regulatory compliance infrastructure and processes to further strengthen our control environment.
  • Developed first-line capabilities that provide incremental oversight of key risks across our businesses.
  • Further strengthened our first-line capabilities for implementing new regulations, managed our operations effectively during a period of significant changes in the regulatory environment and achieved compliance with key regulations by their effective date.

2017 Focus

  • Continue to enhance our first-line-of-defence risk management and compliance practices to manage our operations effectively during an ongoing period of significant change in the regulatory environment.

(1) Prior to November 1, 2016, Patrick Cronin was Chief Operating Officer, BMO Capital Markets and Darryl White was Group Head, BMO Capital Markets.


Caution

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

 

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