Buildings are seen in the financial district in Toronto, January 28, 2013.Mark Blinch/Reuters
The dropping Canadian dollar has made Canada a more attractive place to do business, and U.S. lender PNC Financial Services Group Inc. is expanding its commercial business north of the border to capture the trade flow.
Pittsburgh-based PNC, the sixth-largest U.S. bank by deposits, said Tuesday that the Office of the Superintendent of Financial Institutions (OSFI) had granted its approval to expand its commercial banking services to a full-service Schedule III bank in Canada. PNC will be allowed to take deposits as well as make loans. The bank will also offer treasury management and equipment finance services.
The bank has operated in Canada since 2001, but growing its product offerings makes sense now because its core group of U.S. clients are increasingly expanding in the Canadian market. PNC's cross-border banking services will allow clients to manage both their U.S. domestic and cross-border business in one place, using the same systems. This will make banking easier and more convenient for clients, according to PNC.
"I think it will be much more advantageous for U.S. companies to invest in Canada with the Canadian dollar being a little less, and that will make Canadian commodities and goods and services more competitive in the U.S. marketplace," said George Hoffman, senior vice-president of the global treasury management at PNC.
"I think we'll see a lot more exports coming back ... there's a lot of opportunity for us to tap into those macro-economic conditions," he said.
While PNC does see some business opportunity coming from the local Canadian market, the bank doesn't intend to go head-to-head with the Big Six lenders. Instead, it will focus mostly on cross-border financing and banking needs of its U.S. customers.
This expansion comes more than a year after Wells Fargo & Co. said it would build its business in Canada, and predicted the banking market would expand. At the time, the giant lender also entered Canada with the intention to focus on the interests of existing U.S. clients, but said it expected the commercial lending market to grow.
Another thing the two banks share in common is an appetite for energy. Oil and gas is a sector PNC would like to grow its business, Mr. Hoffman said. "Being from the industrial north-east our roots go back to the oil and gas industry, and I think there will be more opportunities in Western Canada," he said.
The other PNC target markets are Southern Ontario and Quebec both because they are densely populated with high commercial activity levels, as well as a focus on the transporter businesses. "Those are definitely sectors and geographies that we can tap into," Mr. Hoffman said.
PNC has an office in Toronto's financial core, but also has offices in Calgary, Montreal and Vancouver. Staffing numbers aren't disclosed, but Mr. Hoffman says the bank has hired recently, and plans to bring on more employees to support the newly approved business lines.