The Alberta oil patch got a vote of confidence from one of the world's largest bank Monday, as J.P. Morgan established an investment banking beachhead in Calgary as part of an expansion of its Canadian natural resources team.
Already a major player in Canadian energy trading, J.P. Morgan landed the head of UBS Securities Canada's energy banking team, David Harrison, in the first of what's expected to be several hires in Calgary. A 15-year veteran of UBS, Mr. Harrison covered a number of sectors, including oil and gas, power and pipelines, chemicals and forestry.
The decision to ramp up the investment banking group in Alberta came after J.P. Morgan built a substantial commodity trading desk in Calgary by acquiring talent from global rivals that are scaling back their operations.
Last year saw the largest U.S. bank bolt on a UBS commodity trading team, and this year the welcome mat went out for a commodity trading team from a division of Royal Bank of Scotland. So the Wall Street bank already understands some of the subtleties of doing business in Calgary, including the need to host a bash during Stampede.
Mr. Harrison comes aboard as a managing director, reporting to J.P. Morgan's head of Canadian investment banking Adam Howard in Toronto, and the Houston-based head of the bank's oil and gas team.
"David brings tremendous experience, relationships and knowledge advising the top natural resources companies in Canada," said Mr. Howard in a release. "This addition to the investment banking team underscores the firm's commitment to providing our clients with world class service and building our Canadian platform."
As part of a larger strategy to ramp up coverage of Canadian resource companies, J.P. Morgan also recently hired Geoff Cohen as an executive director, based in Toronto and covering Canadian metal mining companies. Mr. Cohen was at Thomas Weisel Partners Canada and Credit Suisse.
When he arrives in Calgary, Mr. Harrison will be the local face for a team of 22 J.P. Morgan professionals covering energy companies out of Houston, and another 15 bankers in this sector at its New York head office. In total, the investment bank has 100 financiers covering resource companies.
Domestic financiers are going to roll their eyes at the arrival of another global bank in Calgary, as most locals will tell you that the city is already over-banked. After all, the past five years saw Morgan Stanley, Goldman Sachs, Macquarie Group and Société Générale expand into Alberta.
However, J.P. Morgan's steady expansion in Alberta speaks to a larger trend - the growing international stature and needs of the Canadian oil patch.
As the oil sands are developed, Calgary-based companies from Suncor on down the food chain are going to need significant capital. International banks plan to help meet that need. The past two years have also shown that international oil and gas companies, including Asia's state-owned energy players, are targeting Canadian energy companies.
It's worth noting that Morgan Stanley teamed up with domestic dealer GMP Securities to lead the recent $1.35-billion initial public offering of Athabasca Oil Sands, one of the largest IPOs ever seen in this country, and the largest debut seen so far this year in North America.
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