Bay Street gives new Finance Minister Morneau a thumbs-up

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Bay Street is giving its blessing to Canada's new Finance Minister – so much so that some bankers who identify as Progressive Conservatives can't help but privately gush about Bill Morneau.

In numerous conversations with senior capital markets figures, Mr. Morneau was consistently described as being well liked and a smart strategic thinker. Such comments were made mostly off the record, owing to company policies or because these professionals would rather not ruffle feathers.

Mr. Morneau took his company public in 2005 – back then it was named Morneau Sobeco Income Fund; following a merger it's now named Morneau Shepell – and in the years since it has issued both debt and equity. Many people from numerous investment dealers have advised or pitched the company over the past decade (though not all of them would have direct contact with Mr. Morneau as he took a step back to executive vice-chairman in 2009.)

The general consensus is that Mr. Morneau is not a divisive person, something that is proven by sustaining support from people of varying political stripes. And it is not lost on anyone that his business has grown since going public – earning him respect in capital markets circles.

Shareholders who invested in the initial public offering have more than tripled their money over the past decade, after accounting for dividends. (Disclosure: I own shares, but sadly have not invested for this full time frame.)

"I have known Bill for over a decade," said Darryl White, chief executive officer of BMO Nesbitt Burns, in an e-mail. Mr. White served as the lead banker on Morneau Sobeco's IPO.

"His appointment is good news for Canada. He is a trusted Canadian business leader with exemplary integrity. He is widely respected for so many things, including his experience, his intellect and his deep commitment to philanthropy and charitable work."

Mr. Morneau has shown that he isn't prone to playing favourites and will reward good work. A funny, but telling, anecdote on this front: When he took his company public in 2005, he had to decide who his lead underwriter would be. Rather than consciously pick between BMO Nesbitt Burns and National Bank Financial, both of whom he believed had given good advice, he called the lead bankers from both dealers to his office and flipped a coin.

When they arrived, he asked them to pick heads or tails. The bankers demurred and said they would have to call their bosses before choosing, because so much was on the line. (Really). Mr. Morneau intervened and made the pick for them. BMO won, and took the lead in the deal, but the CEO awarded the same fees to both dealers. Mr. Morneau described the process as the most "transparent way" of choosing.

Despite starting his new high-profile job with a solid pedigree, capital markets professionals say Mr. Morneau's biggest challenge will be navigating the government. No matter how much of a business background someone has, assuming the Finance post is a daunting task. The Minister's office receives a flood of papers every day. It's one of the few cabinet positions that touches almost everything in government.

Mr. Morneau will also have to manage the bureaucracy, which often has its own agenda and pet projects. Because he will be busy preparing an economic update and then a new budget, an astute chief of staff will be necessary – someone who knows how to push back on the bureaucracy and who can execute the government's agenda.