Canadian Banks Have Bought Pretty Much Everything in Canada

By David Benoit

Canada?s banks can stop looking around their home land, as there?s nothing much left for them to buy.

The nation?s banks have been particularly acquisitive ?since the financial crisis, scooping up Canadian assets of international banks, while also expanding outside their home country.

KBW analysts on Thursday called Wednesday?s deal?by Bank of Nova Scotia to buy ING Direct Canada for $3.17 billion the last of the trend.

?ING Direct most likely represents the last bank for sale in Canada,? the analysts wrote.

In some ways, Scotiabank?s deal is representative of what has gone on since the crisis:?Scotiabank gets needed deposits and ING Groep , advised by J.P. Morgan on the deal, continues its effort to trim itself.

Canada?s banking institutions have completed 118 acquisitions, including purchased stakes of at least 50%, since the start of 2008, according to Dealogic. Scotiabank?s deal would be the fifth-largest such deal in that time frame if completed, the data provider said.

KBW called the deal expensive, but?necessary because Scotiabank ?will improve its funding base with the deal, which is extremely important.?

The acquisition marks Scotiabank?s third major deal in Canada since the financial crisis.

Canada?s banking system is largely consolidated into five national banks. The consolidation is more extreme than in the U.S., where the nation?s biggest four banks have a large market share, but dozens of second and third tier banks play important regional roles.

In the U.S. there are some?7,000 banks. Many believe consolidation would strengthen the system, much like Canada, where its banks are considered more stable. Others say small banks help maintain competition.

Canadian banks have been poking into the U.S. with deals, including Bank of Montreal's purchase of Milwaukee?s Marshall & Ilsley and Toronto Dominion ?s purchase of Chrysler Financial, both struck last year.

Now that Canada is apparently fully consolidated, those five banks may be looking even more to their south.

Source: http://feeds.wsjonline.com/~r/wsj/deals/feed/~3/0dteM6mKEG8/

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