After spending billions of dollars to build a big asset-management business, Bank of Montreal is finally keen to show off what it's got – especially its global footprint.
Since the 2008 financial crisis, BMO has mostly made waves for doubling down in the United States, acquiring Marshall & Ilsley for $4.1-billion (U.S.), and for pushing hard into Canadian retail banking, grabbing headlines by offering cheap mortgages to win market share.
Yet through it all, the bank has also quietly expanded its asset-management business, which now employs 1,800 people across 27 offices globally. Assets under management have expanded five-fold to $250-billion.
Few people have noticed up to this point, and BMO admits it had not done a great job of explaining what it has been up to. Many investors and analysts scratched their heads when the bank bought London-based F&C Asset Management for $1.3-billion in 2014 – not because they didn't like the deal, but because they didn't understand the strategy.
"No question that we are trying to get our message out more," explained Rajiv Silgardo, co-head of the asset-management arm, in an interview.
More than anything, the bank wants outsiders to know that it is extremely proud of its global footprint – something that stands in contrast to its rivals.
Canadian banks have, broadly speaking, refined their strategies to focus on select markets. CIBC is keen on expanding in asset management in the United States; RBC likes rich Western markets such as the United States and Britain; and Bank of Nova Scotia wants to use its asset-management business to complement existing personal and commercial banking footprints in Canada and four select foreign countries: Mexico, Colombia, Chile and Peru.
BMO Asset Management, meanwhile, planted a flag in Europe last year, making the region its fourth major market. It now has offices everywhere from Abu Dhabi to Australia.
This far-flung expansion is by design.
"We have to be able to do more than one thing, in one way, in one market," Mr. Silgardo said.
He and fellow co-head Barry McInerney, who is based in Chicago, strongly believe the best investing opportunities keep changing – Brazil was hot four years ago, now it's a very volatile market – and to best serve clients, the bank has to be in touch with different regions.
"If we were only focused on Canadian equities, if we were only focused on North America, we may not be able to create the winning [suite] that will give them a more consistent outcome," Mr. Silgardo said.
The plan is to use regional expertise to develop funds and investments that can be offered across the bank's asset-management arm. F&C, for instance, has historic specialties in European equities and fixed income, as well as emerging market debt. Those products can be cross-sold to North American clients.
The same goes for F&C's socially responsible investment options, which more people are paying attention to in Canada. BMO recently played host to an educational session about these products in Toronto, and more than 200 investors attended, including major pension funds.
The global asset-management platform also offers BMO scale, providing an opportunity to export its Canadian strengths to other markets. The bank pushed heavily into exchange-traded funds in 2009 and now has about $23-billion in assets under management across 63 different products. Now, the goal is to leverage this expertise in other markets – BMO launched three ETFs in Hong Kong last year and Europe is up next, with London tapped to be the next foray.
The timing of BMO's new awareness campaign is likely no coincidence. Rival banks are talking a lot about their asset-management ambitions, and BMO wants to make sure its capabilities are well known – both by potential clients and also by investors. As Canadian personal and commercial banking growth slows, it is important for the Big Six lenders to show they have diversified businesses that can offset weaker domestic banking earnings.
The asset-management industry is also poised for growth. At the moment, there are roughly $250-trillion of investable assets globally, according to BMO, and professional money managers handle only $70-trillion of it. As baby boomers age and get serious about retirement, and as hundreds of millions of people join the middle class in Asia, there is an expectation that more people will look for help to manage their money.
BMO thinks it is especially well placed to benefit from this trend.
"If you are a bank-owned asset manager, you have a strong competitive advantage, we feel, versus independents," Mr. McInerney explained. BMO, like its Big Six rivals, can sell its own funds through its existing branch distribution networks, whereas independents often have to pay trailer fees to retail advisers simply to get their products noticed.
As lucrative as BMO's recent growth appears, the bank acknowledges that it will take time to integrate all the different brands and cultures it has acquired into one consistent platform. For that reason it has brought top people, such as regional chief investment officers and asset-class heads, together at an annual conference for the past three years, both to talk about the future of markets and also to bond.
"Internally, our [new] colleagues are just getting to know us," Mr. Silgardo said.