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Canadian banks armed for acquisitions

Canadian banks, after months of anticipation, are starting to deploy their capital reserves as they eye rivals weakened by the global economic crisis.

Bank of Montreal (BMO-T), the nation's fourth-largest bank, said Friday it agreed to buy Wisconsin's Marshall & Ilsley Corp. (MI-N) bank for about $4.1 billion.

The all-stock deal was the largest by Canada's big six banks this year, each playing to their strengths as they snap up rivals or push into markets as competitors retreat.

In April BMO's Harris unit announced plans to acquire assets and liabilities of U.S. lender Amcore from the Federal Deposit Insurance Corp. in a deal to boost its reach in Illinois and Wisconsin.

The bank said last month it was seeking acquisitions to complement its wealth management business in China.

Following is a look at the acquisition strategies some of the other Canadian banks, and some of the deals done in the past year:

TORONTO DOMINION BANK

Toronto-Dominion Bank (TD-T), Canada's second-largest, has likely been the most active, targeting growth in U.S. retail banking, where it has gone from having no branches in 2004 to now boasting about 1,300, versus 1,100 in Canada.

  • Sources say Toronto-Dominion is now in talks to buy lender Chrysler Financial from private equity firm Cerberus Capital Management. The deal, if confirmed, would likely be valued at between $6 billion US and $7 billion US, and would add to growing list of U.S. acquisitions and could give the bank a "first-mover" advantage if Canada's government amends laws that currently prevent banks from offering auto leasing.
  • In May TD said it would buy troubled U.S. lender South Financial Group Inc. for about $192 million as it expands its footprint in the Southeast.
  • In April the bank announced the acquisition of assets and liabilities of three troubled Florida banks worth $3.8 billion US from the Federal Deposit Insurance Corp (FDIC).

BANK OF NOVA SCOTIA

Canada's third-largest lender, Bank of Nova Scotia (BNS-T), has stepped up acquisitions in recent months, expanding its footprint in Latin America, where it is active in Peru, Brazil, Chile, Colombia, Costa Rica, Dominican Republic, El Salvador, Guatemala, Mexico, Panama, Puerto Rico and Venezuela. It also has a growing presence in East Asia.

  • Most recently the bank pushed into Uruguay with the acquisition of private bank Nuevo Banco Comercial and consumer-finance company Pronto.
  • In November it agreed to buy the 82 percent of DundeeWealth it does not already own for $2.3 billion, giving a significant boost to its domestic wealth management presence.
  • In September it acquired Royal Bank of Scotland's Chilean wholesale banking operations.
  • And in March Thanachart Bank, 49 percent owned by Scotia, agreed to pay $1 billion for a 47.6 percent stake in Siam City Bank in Thailand's biggest acquisition in four years.

ROYAL BANK OF CANADA

Canada's largest bank, Royal Bank of Canada (RY-T), has also signaled it is on the lookout for acquisitions.

  • On Oct. 18 it said it agreed to buy British fund manager BlueBay Asset Management for 963 million pounds ($1.5 billion US) in a push to cement its position as a leading global wealth manager.

CANADIAN IMPERIAL BANK OF COMMERCE

The Canadian Imperial Bank of Commerce (CM-T), the No. 5 bank, has been active in building its portfolio of credit card businesses, but has indicated limited interest in opportunities for acquisitions outside of Canada.

  • In June CIBC agreed to buy Citigroup's $2.1 billion Canadian MasterCard business, becoming a dual credit card issuer.

NATIONAL BANK

National Bank of Canada (NA-T), the country's sixth-largest bank, has said it wants to bulk up its retail presence across Canada, and could bid on struggling smaller lenders to add to its branch network. 

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