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When Toronto-Dominion Bank cracked open the vault and paid $224-million to purchase the services of a few dozen Newcrest Capital partners, eyebrows were raised on the Street.

At first, it wasn't hard to find critics who felt that the premium of three times book value paid for Newcrest amounted to a steep bill. After all, the only assets here go up and down on the elevator each day.

But just a few months after the deal closed, it's getting harder to find critics.

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First, the Newcrest team is putting up numbers. The combined team of TD and Newcrest investment bankers in Calgary are at the heart of the oil patch merger and acquisition activity.

And look at last month's Canadian equity block trading tables. With what amounts to a new team on the desk, and one of the better research departments, TD Newcrest ranked third in February on its volume of buying and selling. The shop is not far behind perennial market leaders BMO Nesbitt Burns and RBC Dominion Securities.

This is rare air.

Last year, TD Securities ranked seventh in terms of its share of the domestic market.

For some months, this column has ignored block trading statistics generated by the Canadian exchanges.

The numbers have always been a trifle suspect and don't capture the huge amounts of trading now done in interlisted Canadian companies on U.S. exchanges.

But it's impossible to start dreaming of expanding in North America, as TD Bank clearly does, without a strong base in Canada. And the league tables show that TD Newcrest, the institutional equity operation, clearly holds out the promise of a top-tier domestic platform.

Which brings us to the other reason that the Newcrest purchase -- funded mostly with TD shares -- makes sense for a bank on the move.

There's this broad assumption that bank mergers are in the offing, and TD Bank and Royal Bank of Canada are perfectly positioned to dominate Canadian finance by swallowing up rivals.

But listening to CIBC chief executive officer John Hunkin add his voice to that of rivals at yesterday's annual meeting, it's becoming increasingly clear that Canada's senior bankers don't see deals coming any time soon. And none of the CEOs see domestic mergers as much of an answer to their problems with finding new places to grow.

Mr. Hunkin, as blunt a CEO as you're likely to meet, said yesterday that an in-country merger in a market as mature as Canada's only made sense if it furthered a bank's foreign expansion plans. In CIBC's case, that means Mr. Hunkin wants a partner who will help fund a costly build-out of electronic bank Amicus and his cross-border investment bank, CIBC World Markets.

At TD Bank, CEO Charlie Baillie is in the enviable position of having a top-tier international discount brokerage operation in TD Waterhouse.

He can use the operation to piggyback an investment banking expansion in the U.S. market, and to increase TD's share of the domestic equity and fixed-income market.

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If building investment banking is your goal, what strategy makes more sense: Wait patiently and hope Ottawa's politicians give the green light to a jarring in-country merger, or spend $224-million, mostly in your own paper, for a proven team?

The longer we wait for bank mergers, and we are going to wait a while, the smarter TD's purchase of Newcrest looks. West coast moves Some familiar faces among the Vancouver equity sales community are on the move.

Doug Gordon, who was with Newcrest Capital for five years, is now on Canaccord Capital's institutional desk in Vancouver. Prior to joining Newcrest, he worked for Gordon Capital.

At UBS Bunting Warburg, colleagues are planning a retirement party for Doug Hendry, who got into the business as a money manager 31 years ago.

Mr. Hendry spent the past decade in institutional sales for UBS Warburg, and also worked at Gordon Capital. awillis@globeandmail.ca

Blockbusters

Last year's top 15 dealers in blocks of 10,000 shares or more.

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Volume
(billion
Market
Value
Market
shares)
share
($billion)
share
BMO Nesbit Burns           3.4    12.3%   $104.2     13.8%
RBC Dominion               3.3    12.0     101.6     13.4
National Bank Financial    2.9    10.5      79.6     10.5
Scotia Capital             2.8    10.2      92.4     12.2
CIBC World Markets         2.3     8.4      77.3     10.2
Griffiths McBurney         1.7     6.1      35.8      4.7
TD Securities              1.6     5.9      48.8      6.9
Merrill Lynch              1.4     5.1      45.0      5.9
UBC Bunting Warburg        1.4     5.0      40.3      5.3
Newcrest Capital           1.0     3.8      26.7      3.5
HSBC Securities            0.9     3.5      19.5      2.6
Yorkton Securities         0.6     2.0       7.8      1.0
FirstEnergy Capital        0.5     1.8      10.0      1.3
CS First Boston            0.5     1.7      11.5      1.5
Canacord Capital           0.3     1.1       n/a      n/a

February's top 10 dealers in blocks of 10,000 or more.

Volume
(billion
Market
Value
Market
shares)
share
($billion)
share
BMO Nesbitt Burns        329.8    13.0%     $8.0     13.7%
RBC Dominion             305.6    12.0       8.4     14.4
TD Newcrest              235.7     9.3       5.2      9.0
Scotia Capital           213.1     8.4       6.0     10.3
CIBC World Markets       211.5     8.3       5.6      9.7
National Bank Financial  209.1     8.2       5.2      8.9
Griffiths McBurney       193.6     7.6       3.4      5.8
UBS Bunting Warburg      171.6     6.7       3.7      6.3
Merrill Lynch            122.8     4.8       3.9      6.7
HSBC Securities           87.4     3.4       1.6      2.8

Source: TSE, ME, CDNX

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