"The surge in business investment that began last summer can only be the start," declared Mark Carey, governor of the Bank of Canada (BOC). BOC's analysis concludes that Canada is emerging from the global recession more rapidly than the United States, Europe, and Japan. (BOC is roughly analogous to the U.S. Federal Reserve System and is responsible for maintaining an efficient and sound financial system. It controls monetary policy issuing bank notes and setting interest rates.)

A major reason for Canada's relatively rapid economic recovery is what the World Economic Forum calls "the world's strongest banking system." Despite the economic turmoil of the recession that saw the collapse of numerous U.S. financial institutions, no Canadian banks failed or required costly bailouts.

CANADA'S BANKING SYSTEM
Canada's financial sector includes banks, insurance companies, and other financial services organizations. It employs over 750,000 people and generates 6 percent of Canada's gross domestic product.

Canada's banking system is quite different from that of the United States. While the U.S. system was copied from England's, Canada's was copied from Scotland. While the United States has many small banks, Canada has fewer but larger banks with many branches, more than 8,000 of them. For example, in 2006 the six largest Canadian banks controlled 90 percent of the country's financial assets. In contrast, the five largest U.S. banks controlled only 9.7 percent of U.S. domestic assets.

The five largest Canadian banks, the so-called Big Five, are:
• • Royal Bank of Canada (RBC)
• • Toronto Dominion Bank
• • Bank of Nova Scotia (Scotiabank)
• • Bank of Montreal (BOM)
• • Canadian Imperial Bank of Canada (CIBC)

+The Big Five are actual financial conglomerates. Their activities include mutual funds, insurance, credit cards, and brokerage activities as well as banking. They have large international subsidiaries.

CIBC acquired U.S.-based Citigroup's Canadian MasterCard portfolio in September 2010. This C$2 billion portfolio makes CIBC Canada's largest dual issuer of Visa and MasterCard credit cards.

In 2011, strong growth of RBC's trading commissions and improved investment banking results are expected to more than offset low growth in the bank's currency and commodity activity.

Loan growth in emerging markets should be good for Scotiabank, which is the most diverse geographically of Canada's five largest banks. In February, Scotiabank completed the acquisition of Canadian wealth management company DundeeWealth, which has C$82.3 billion in feeearning assets under management. For the fourth quarter of 2010, DundeeWealth's profits were C$31.8 million, compared to C$11.2 million for the same 2009 period.

BOM's 2008–2009 results were adversely affected by its large exposure to U.S. lending. Its U.S. operations posted losses for the last three years, but returned to profitability in fiscal 2010, posting a C$59 million net profit. Meanwhile, the stronger Canadian dollar may negatively impact Toronto Dominion Bank's income from U.S. operations.

Based in Quebec City, National Bank Canada is the sixth-largest bank in Canada and offers individual, corporate, and investment banking services. In addition, there are smaller, "second tier" banks such as HSBC Bank Canada and ING Bank of Canada. There are also alliances such as the Desjardins Group. These are largely Canadian domestic institutions, while the Big Five have international interests.

PENSION FUNDS
Pension funds are investing globally, as well as in Canada, to secure assets that will provide revenue for retirement income for Canada's aging population. For example, the CPP Investment Board manages C$140 billion in assets for Canada's national pension plan. It is one of Canada's most active investors in assets ranging from real estate to highways. The organization was a major player in the largest private equity deals of 2009 and 2010: the C$4 billion purchase of U.S.-based IMS Health, Inc., and the C$4.4 billion acquisition of U.K.-based engineering firm Tompkins PLC. IMS Health provides drug sales and consulting services to the global pharmaceutical industry.

INSURANCE AND FINANCIAL SERVICES
Insurance and financial services firms are other important parts of the Canadian financial industry. Some of these firms are global in scope. For example, Manulife Financial has clients in 22 countries and owns Manulife Bank. It operates in the United States under the name "John Hancock." Its services include individual life insurance, group life and health insurance, long-term care services, pension products, annuities, mutual funds, and banking services.

Sun Life Financial, headquartered in Toronto, was named the "Most Trusted Life Insurance Company" in Canada in both 2010 and 2011 by the Reader's Digest Trusted Brand Survey. Sun Life offers its clients life, health, dental, and disability insurance plus education savings plans and various other financial security products.

RBC Dexia Investor Services provides institutional investors with a package of financial services that includes pension fund administration and security lending. It administers more than C$2 trillion in client assets.

With C$484 billion under management, Great-West Lifeco Inc. is in the life insurance, health insurance, retirement savings, investment management, and reinsurance businesses. It's Canada's largest insurer.

Headquartered in Montreal, Desjardins has over C$172.3 billion in total assets. It serves 5.8 million individual members in Canada and Florida and 400,000 Canadian businesses.

TORONTO — CANADA'S FINANCIAL CENTER
More than 205,000 people work in Toronto's financial services industry. Canada's five largest banks have their headquarters in downtown Toronto's financial district. Other financial institutions, particularly insurance companies, also have headquarters or offices in the financial district, as do many of Canada's largest companies. Bank office towers host their own operations as well as those of other companies.

The Bank of Montreal is located in Canada's tallest building, First Canadian Place. The Royal Bank of Canada is located in two adjacent skyscrapers known as Royal Bank Plaza, but also occupies space in the RBC Centre that it shares with RBC Dexia Investor Services Trust, which it partially owns. Scotia Plaza is home to Scotiabank. The Brookfield Place office complex is home to Toronto Dominion Bank. The Exchange Tower houses the Toronto Stock Exchange and National Bank Financial. The Canadian Imperial Bank of Commerce is located in the four-building complex known as Commerce Court.

OTHER FINANCIAL CENTERS
Toronto may be Canada's largest financial center but it is not without competitors. Montreal's financial services industry boasts more than 3,000 companies employing more than 100,000 people. Major firms include Desjardins and National Bank, plus insurance firms Standard Life and Sun Life Financial.

Moving west, more than 20,000 people work in Winnipeg's financial services industry, which includes a host of insurance and mutual fund companies. Great-West Lifeco Inc. is headquartered in Winnipeg.

Fueled by the petroleum industry, Calgary is Canada's fastest-growing city and a major financial and business center in its own right. Its financial services industry has grown twice as fast as the national economy for over a decade. Firms provide banking, insurance, brokerage, and other financial services. More than 22,000 people work in Calgary's financial services sector.

And, Vancouver — Canada's gateway to rapidly growing Pacific Rim economies — is another western Canadian financial center. All five of Canada's largest banks have operations here. Vancouver also is home to the Canadian headquarters of 30 foreign banks. Interestingly, Vancouver City Savings Credit Union (VanCity) is the largest Englishspeaking credit union in Canada.