TORONTO – Canadian banks are looking to expand in the United States, taking advantage of pro-growth policies expected to be pursued by President-elect Donald Trump‘s new administration, senior executives told a banking conference in Toronto.
The valuations of U.S. regional banks have soared following Trump’s victory in the Nov. 8 presidential election, supported by the prospect of higher interest rates, softer banking regulation and a lower corporate tax rate.
Royal Bank of Canada Chief Executive Officer Dave McKay expects the bank to benefit from changes made by the incoming president, he said at the RBC 2017 Canadian Bank CEO conference.
“We do see a stronger growth agenda in the United States, we do anticipate pro-growth policy coming out of the new administration,” he said. “That would potentially lead to higher rates which is very good for our franchise in the United States.”
Canada’s largest banks want to expand in the United States to offset sluggish growth in their domestic market.
Toronto-Dominion Bank CEO Bharat Masrani told the conference the bank would look at acquisition opportunities in the U.S. southeast or expanding its credit card business in the United States.
“We are organically growing right through our franchise but I would like to see more in the southeast of the U.S. because I think there’s more opportunity there,” he said.
TD, which is Canada’s second biggest bank, has grown to become one of the ten biggest banks in the United States, where it has a major retail presence serving 9 million people through a network of 1,300 branches.
RBC has said it plans to expand further in the United States following its $5 billion acquisition of Los Angeles-based City National in 2015.
Bank of Montreal CEO Bill Downe told the conference that he also expected to see an acceleration in growth in the United States going forward.
“Clearly, the new administration is leaning toward more fiscal stimulus than was present. The reliance on monetary stimulus is ebbing away. Both of those things are good for our clients in the business that they do,” Downe said.
The bullish outlook for U.S. banks has not been entirely beneficial to the Canadian banks’ attempts to expand south of the border. Chicago-based PrivateBancorp Inc postponed a shareholder vote on a planned takeover by Canadian Imperial Bank of Commerce in December after rising valuations led some shareholders to question the deal.