Nichola Saminather and Pamela Barbaglia

LONDON/TORONTO – Toronto-Dominion Bank, a cash-rich Canadian bank, is leading the charge to explore the United States. It hopes to find new growth and diversify their market position away from the Big Six.

Excess cash in excess of $2.5 billion that had been amassed over a two-year period of capital redistributions was lifted only last month. Share prices near record highs gave Canadian banks an acquisition currency with which to wager on the downsizing and exit of many European and international banks.

According to two sources, the recent sale of BNP Paribas U.S. Unit, Bank of the West, (OTC) is an example of the current pent-up demand. Toronto-Dominion Bank and rival Canadian lender Bank of Montreal are fighting it out, these sources said.

Bank of Montreal announced Monday that it would buy Bank of the West from BNP Paribas in the largest deal of its kind ever.

According to sources, TD Canada was the second largest bank in Canada by market value. It had examined every portfolio of major assets that were up for sale.

After its close loss to BMO, it continues to search for acquisitions in America.

TD spokespersons and BMO spokespersons declined to comment on bidding or the future growth plans for the United States. MUFG did not comment on Canadian banks’ interest in the assets of their assets, and BBVA didn’t immediately reply to a request.

Brian Madden (portfolio manager, Goodreid Investment Counsel) said, “Banking involves scale, technology, and sophistication.”

He stated that Canadian banks are in a good position to increase their U.S. operations because they’re “directly connected to the largest bank market on the planet.”

Earlier in the year, TD executives indicated that it would not shy away from doing a bank transaction in the U.S. Southeast.

According to one source, TD will now be focusing its attention on smaller banks after it missed several big acquisitions.

In Canada, the Big Six Banks include TD, BMO and Canadian Imperial Bank of Commerce.

TD Bank is one of America’s top 10 banks. Royal Bank also owns City National Bank, California’s 9th-largest bank, by deposits.

Royal Bank has also been undergoing U.S. expansion, although Canada’s biggest lender is more focused on its wealth management https://www.reuters.com/article/us-rbc-wealth-idUSKBN25U1I6 business in the United States.

CIBC entered the United States with the acquisition of PrivateBancorp in 2017. It has stated that it is aiming to increase its earnings in the United States over the next few years.

Royal Bank didn’t respond to our request for comment. CIBC did not respond to a request for comment.

BMO’S CHASE

One source said that BMO was interested in BancWest following the loss of the U.S. retail businesses of MUFG (Japan’s largest lender), one of the sources. MUFG sold its U.S. Retail business to U.S. Bancorp, for $8 billion.

According to a source, BMO submitted a bid for MUFG assets. Its disappointment led Canada’s fourth largest bank, BancWest, to quickly move on the BancWest sale.

BNP Paribas was advised by JPMorgan (NYSE) and Goldman Sachs(NYSE:). It entered parallel talks with both TD (NYSE:) as well as BMO. This increased pressure on the bidders, who were concerned about regulatory hurdles that could hinder the sale.

BNP Paribas didn’t respond to our request for comment.

TD made a low initial bid, and it later raised it. BMO, however, was aggressive and quick to declare its offer “best” in December, after having offered a final sweetener.

BMO will be the 16th largest bank in America by assets, up from the 19th, with the deal bringing its total assets to almost $300 billion.

By merging with U.S. rivals, Canadian banks with an existing U.S. presence are expected to extract better returns from these businesses than smaller players, even when they appear to pay a premium as BMO did for BancWest, said Anthony Visano, portfolio manager at Kingwest & Co.

Madden of Goodreid Investment stated, “Sometimes strategic value overrides the financial consideration.”