A leading U.S. bank catering to technology companies has made major strides toward setting up shop in Canada, promising fresh competition in an already dynamic corner of the country's banking sector.
Silicon Valley Bank has received a blessing from Canada's Finance Minister to establish its first Canadian branch, and hired Barbara Dirks – until now, a senior vice-president at Royal Bank of Canada – as head of Canada to steer its growing presence in the country.
The Santa Clara, Calif.-based bank, known as SVB to many of its clients, already lends money to Canadian firms with U.S. operations – including retail merchant software-provider Shopify Inc. But SVB applied to Canada's banking regulator last May for a licence that will expand and formalize its ability to lend to commercial clients north of the border, as first reported by The Globe and Mail.
The competitive dynamic in banking tailored to Canada's tech companies is rapidly changing, and SVB's push to set down Canadian roots promises to add a new dimension. In January, Canadian Imperial Bank of Commerce paid an undisclosed sum to acquire private specialty finance firm Wellington Financial as the anchor for a new business line dubbed CIBC Innovation Banking. Since then, Mark McQueen – a Bay Street financier and long-time boss at Wellington who is now the new CIBC unit's president and executive managing director – has been adding talent to his team. The most prominent hire was Rob Rosen, a leading Toronto-based technology banker poached from rival Comerica Inc. in February.
With US$51-billion in assets, SVB has carved out a successful niche in tailoring banking services to tech firms and venture capitalists, including early-stage and high-growth companies.
SVB claims to bank more than half of all venture-backed companies in the United States, about 60 per cent of all American venture-capital firms, and has outposts in London, China and Israel. (The firm once had a presence in India as well, but pulled out due to regulatory concerns.)
SVB's Canadian expansion comes as Canada's artificial-intelligence sector (AI) is flourishing, and the federal government has promised to pour hundreds of millions of dollars into AI, venture-capital investments and clean-technology firms. The California-based bank is looking to claim a larger slice of that action by providing domestic services to private and public technology and life-sciences companies across Canada, as well as their investors.
Whereas SVB has typically relied on relationships with venture capitalists, lawyers and company executives to introduce the bank to Canadian firms as they moved into the United States, its executives now want to lend first in Canada and then shepherd companies through cross-border expansion plans. In an interview with The Globe last spring, SVB's head of technology banking, John China, said the bank can no longer wait for "reactive solicitation."
"The market [in Canada] is so exciting," he said at the time.
With a federal order authorizing SVB to establish a lending branch in Canada now in hand, the bank is awaiting final approval from the Office of the Superintendent of Financial Institutions – expected later this year – before opening the doors of its first branch in Toronto.
"This marks an important milestone in our aspirations to support our innovative clients in key international markets, and we are thrilled to bring Barbara on board to lead the way in Canada," said Mark Gallagher, SVB's senior market manager.
Ms. Dirks begins her new role immediately, overseeing business development and operations, among other activities, and will chair the bank's supervisory committee in Canada.
Most recently, she was RBC's senior vice-president of network and adviser strategy, and serves on the board of governors at the Royal Military College of Canada. She also previously spent 15 years at Bank of Montreal, including a stint as chief operating officer for North American commercial banking.