Canada's Big Five Set To Eat Wall Street's Lunch?

Are the top five Canadian banks about to eat Wall Street's lunch with new hiring efforts?

They're set on taking a nice big bite, at least.

Canadian career coach Alan Kearns says Canada's Big Five banks are finding a new window of opportunity given the present troubles in the U.S. "It's an opportunity for them to grow different parts of their business with access to some really good people when U.S. markets are in turbulence and our banking system is really strong," says Kearns, founder of Toronto-based CareerJoy, the national career and leadership coach.

Kearns sentiment was reflected in a recent Wall Street Journal report that said: " As American banks lay off, their neighbors to the north are hiring."

The Journal quoted Bill Vlaad, founder of Toronto capital markets recruiter Vlaad and Co. as saying his firm has had more phone calls in the second quarter seeking U.S. professionals than in the previous seven quarters combined.

And, these Canadian clients are focusing on recruiting senior, seasoned talent. "They want senior players who can gain client attention," Vlaad said. "They're looking for generals, not foot soldiers."

Quite simply, Canadian banks that had had already begun hiring bankers laid off back in 2008 and 2009 are gearing up to capitalize on the latest crop of layoffs and hiring slowdowns by Wall Street banks. And according to the Journal, the I-banking arms of Royal Bank of Canada, Toronto-Dominion Bank, Bank of Nova Scotia, Bank of Montreal, and Canadian Imperial Bank of Commerce are looking to hire for M&A, advisory, underwriting and other investment banking work.

Commodities-focused investment bank specialists will be in demand

Bankers with specific knowledge of resource-based industries such as mining, oil and gas, pulp and paper and energy sectors may be some of the most highly sort after.

Kearns says Bank of Montreal and TD Bank are particularly strong in commodities-based business and are particularly likely to seek U.S. hires to staff them.

And a Bank of Montreal official says at BMO, at least, recruiting may take place both north and south of the Canadian border, with BMO reporting recruiting efforts in Chicago, Houston, Boston and San Francisco, or instance.

Still, no region is completely without its economic risks-not even Canada.

In a recent note to clients, Murray Leith, director of investment research at boutique broker Odlum Brown in Vancouver, says the banks are facing headwinds, ranging from increasing domestic competition to the possibility of an economic slowdown in China that could impact Canadian commodities.

Canada's Globe and Mail cited international law firm Baker & McKenzie as a firm which had "largely gone unnoticed in the Canadian legal market, keeping to its knitting and serving the Canadian needs of its U.S. and overseas clients. But a local managing partner of the firm saw that changing. "Just as other large, global, full-service law firms, and their multinational clients, are becoming increasingly interested in Canada for its natural resources and stable economy," his firm is mounting a Canadian offensive, he said.

The big difference here, of course, is that rather than seeing American banks crossing over into Canada as a gateway to the region, it's the Canadians who are taking the initiative.

One reason for new hiring, says Vlaad, is that Canadian banks emerged from the debt crisis in better shape than American banks. They took on less risk and were subject to tighter regulations, with an assets-to-total capital ratio of 20 to 1 versus a typical 30 to 1 ratio (or higher) in the U.S.

But clearly too, Canada lacks the scale to offer solace job for every Wall Streeter who's been kicked to the curb of late. "The number of employees at U.S. firms dwarf Canadian headcount," Vlaad observes. While the investment banking business at J.P. Morgan employs around 26,500 people, the average Big Five bank has between 1,000 to 6,000 employees in that division, the Journal reported.