French investment bank Natixis to open Toronto office as market faces historically high vacancy rates

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The investment banking arm of a French financial giant is moving into English Canada.

Natixis, part of the Paris-based Groupe BPCE conglomerate that includes Banque Populaire and Caisse d’Epargne, will open its first office in downtown Toronto on Thursday. The expansion comes a decade after Natixis first arrived in Canada with a single office in Montreal in 2012.

“Our presence has grown significantly, particularly over the last two or three years where we have had a rapid expansion,” Michael Costakos, who spent 18 years at Scotiabank before becoming senior country manager for Natixis in Canada in 2021, said in an interview. “The opening of the Toronto office is a really exciting opportunity to us. It represents an expansion and the progression of our team and more importantly, I think it underscores our ambition to continue to grow in Canada.”

Located at in the Brookfield Place tower on Bay Street, Natixis will be leasing roughly 5,000 square feet at a time when the Toronto office market is facing historically high vacancy rates. However, Mr. Costakos said high-end commercial space is still facing intense competition as other corporate tenants seek to upgrade from lower-end spaces or less conveniently located buildings.

“Originally, when we started looking at our expansion and we started looking at Toronto, given COVID had just hit, you would think anecdotally that it was a buyer’s market so to speak,” he said. “I found it to be something of an Olympic sport to be honest to find a good space. What I learned through the process was you see a movement to a higher class of building, I think COVID was an opportunity to relocate if they weren’t quite happy with their building.”

In addition to compliance officers and internal finance specialists, the new office will support half a dozen investment bankers. Natixis’s Canadian operations primarily involves assisting large institutional investors such as pension funds, asset managers and insurance companies with their investments outside of Canada.

Mr. Costakos said Natixis has made “a great amount of headway” with Canada’s largest banks, particularly when it comes to euro-denominated investments. “We have been a big part of leading those efforts for the Canadian banks because that is the core of our market.”

The Toronto office will be hiring a few more front-office staff before the end of the year, he said, but part of the strategy is to leverage the larger resources available at the Natixis Americas headquarters in New York.

“We are a satellite of a satellite,” he said, “but we are able to lever on the broader organization and lean on the resources that we have available both in New York and ultimately in Paris as well as around the world.”

“We will re-evaluate in 2024 and see what happens there, obviously a higher interest-rate environment creates some headwinds economically, but the expansion of our client base hasn’t really slowed down,” Mr. Costakos said.