Investment Banking in Canada

Updated on April 30, 2024
Article byWallstreetmojo Team
Edited byAshish Kumar Srivastav
Reviewed byDheeraj Vaidya, CFA, FRM

Investment Banking in Canada

How is Canada a market for investment banking? Is it similar to the USA market? What sort of funds do Canadian investment banks handle? How do investment banks in Canada make the selection? In this article, you will answer all the above questions.

Let’s have a look at the sequence of the article –

Overview of Investment Banking in Canada

For outsiders, it seems that investment banking in Canada is a lot like investment banking in the US, right? Wrong! There are many differences in recruitment, selection process, market, the demand for investment banking jobs in Canada, and investments handled.

  • The first thing you would notice in Canadian investment banking is that it is very tough to get in. But fortunately, very few people apply for investment banking in the first place.
  • The second notable thing is the market. Investment banking in Canada is much smaller than in the USA. Here investment banking revolves around four financial hubs (usually) – Toronto, Calgary, Montreal & Vancouver. If you want to break in, you should live near these places or move to them.
  • The third noteworthy thing is the structure maintained in Canadian investment banks. In the USA, top-notch MBA institutes are usually directly hired for associate positions; but in Canada, the analysts only become associates within three years. Moreover, in Canada, an MBA is not as common as in the USA. And what’s more surprising is that the investment banks in Canada are ready to accept proposals from candidates from completely different/unconventional backgrounds.
  • The last thing that will give you a brief of investment banking in Canada is the focus of the investment. In the USA, the industry focus and reach are both much bigger. However, in Investment Banking in Canada, the actual focus of investments is in three specific industries – energy, mining, and natural resources. In two financial hubs, Toronto & Montreal, few tech, biotech, and pharmaceutical investments can be found.

Let’s now look at the service offered by Canadian investment banks.

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Investment Banking Services in Canada

Investment Banking in Canada

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In the case of services offered, Canadian investment banks are similar. Let’s have a glance at the various services they offer under the umbrella of investment banking –

  • Advisory/M&A: The most important of all services are advisory in M&A. No matter what is the requirement of the firm, whether it can be merged, acquisition or sales, investment banks in Canada are always on their toes to help their customers get the best deals and offer the best value. If transactions are complex, the most efficient teams of M&A will handle and offer their customers a hassle-free advisory service.
  • Services for Debt & Equity Capital Markets: No matter what is the need – hedging, stake building, yield enlargement, or disposal, Canadian investment banks help customers understand the market trends and mention ways to act on them. The expert team at Canadian investment banks guides through all the intricacies and helps the customers make some serious money on every deal. Now, debt and equity capital markets are very volatile, and one needs to be sufficiently knowledgeable to profit from them.
  • Investment research: Investment banks in Canada (like USA investment banks) are pretty good at investment research. They use quantitative market research, statistical modeling, digital footprint analysis, and data science while looking for the best investment deals. As the market focus is narrow, they can go in-depth with every market they look at. As a result, these research reports become invaluable properties to esteemed customers.
  • Bespoke financing: Bespoke financing is another avenue of services offered by Canadian investment banks. From long term to short term, from simple to complex, these banks offer all sorts of customized financing solutions for all of their customers.
  • Retail investment products: Investment banks in Canada also offer retail investment products. Every individual has different investment objectives and risk appetite. Canadian investment banks offer entry points to every possible market and strategies to get in there and generate better yields.
  • Sales & Trading Services: Investment banking in Canada also provides sales and trading services to customers looking to engage effectively in their valued market and make more money. From cash equities to credit facilities, from an emerging market to derivatives, investment banks in Canada help all clients access the products and provide the liquidity they need.

Top Investment Banking Firms in Canada

Leadersleague.com has published its 2016 ranking list of the top investment banks in Canada. Leadersleague.com has provided rankings for Leadersleague.com has published its 2016 ranking list of the top investment banks in Canada. Leadersleague.com has provided rankings for large caps as well as small and Mid-caps.

Top Investment Banks in Canada – Large Cap

Leading” Investment Banks

  • BMO Capital Markets
  • CIBC World Markets
  • RBC Capital Markets

“Excellent” Investment Banks

  • Goldman Sachs
  • Morgan Stanley
  • Scotia Bank
  • TD Securities

Highly Recommended Banks

  • Bank of America Merrill Lynch
  • Barclays
  • GMP Securities
  • HSBC
  • JPMorgan
  • National Bank Financial

Top Investment Banks in Canada – Small & MidCaps

Leading” Investment Banks

  • BMO Capital Markets
  • CIBC World Markets
  • National Bank Financials
  • RBC Capital Markets

“Excellent” Investment Banks

  • Cormark Securities
  • FirstEnergy Capital
  • GMP Securities
  • Macquarie Group
  • PWC
  • TD Securities

Highly Recommended Banks

  • Canaccord Genuity
  • UBS Investment Bank
  • Scotiabank

Recruitment process in Investment Banks in Canada

Canadian investment banks’ recruitment process is much different from the Top investment Top Banks in USA & Europe. Let’s have a look at the process in detail –

  • No existence of assessment centers: Investment banks in Canada do recruitment through face-to-face interviews and natural selection. There are no assessment centers whatsoever to choose candidates. In European investment banks, recruitment can’t be perceived; however, in the USA, rarely would you see the existence of assessment centers in the process of recruitment.
  • Resumes are also similar: If you create a banking-friendly resume, that would be enough. There’s no requirement of making it something else and no need at all to do so. A simple, easy-to-read banking resume will do the trick.
  • The entire focus of the interview is on “fitment”: As the offices and banks are smaller in Canada, the idea of “fitment” is most important to them. Thus, they don’t mind calling people from other unconventional backgrounds; but they should be culturally fit for the organization. And that’s the reason all interview questions would be majorly “fit” questions. So if you would like to start in an investment bank in Canada, know about the investment bank well in advance and see whether your aspirations, knowledge, skills, and ambitions go with the bank’s existing culture.
  • The first round of interviews: Usually, the agency takes this interview or sometimes directly by the banks. In this interview, they want to know whether you can work or not. It is a basic screening interview, and if you’re reasonably good, chances are you will get through it easily.
  • Superday interviews: During these interviews, the candidates get stressed about what super day interviews would be. The interviews will depend on your background and working within normal circumstances. Usually, super day interviews are about fitment or judging your technical expertise. During super day interviews, the interviewers want to know whether they can like you or not. If they like you, you will get hired. In the case of Canadian investment banks, super day interviews are more about fitment and less about technical abilities. But it would help if you were quite decent in technical expertise.
  • An additional round of interviews: If they get a couple of candidates after super day interviews, you can expect another round of interviews to find out who would be hired at the end of the day. This interview will look at both the candidates, their fitment, educational backgrounds, work ethic, knowledge, technical expertise, etc. After holistically judging both pros and cons of both candidates, they will finally decide who will get hired.

Culture in Investment Banks in Canada

You may think that the investment banking culture in Canada would be quite different from American investment banks. But the truth of the matter is that it is quite similar. You need to put in at least 90 hours every week in Canadian investment banks. That means you would have almost no-work life balance. And if you have decided to work in an investment bank, work-life balance may be the last thing that will cross your mind.

In most cases, you will be spending 30% of your time on deals and clients. And the rest of the time would be spent finding prospects, creating financial models, and working on pitch books. Unless you’re not part of an extremely dynamic group of investment bankers in Canadian investment banks, this is how you would work. And if you’re working as an analyst, your exposure would be much more than analysts in USA investment banks. The reason behind this is the size of the funds and clients you will handle. Usually, in Investment Banking in Canada, both are smaller.

Also, have a look at Investment Banking Lifestyle

Investment Banking Salaries in Canada

If you would like to work as an investment banker in Canada, it should be out of passion or a deep curiosity to know the market. If you’re there for compensation, then you may get disappointed.

Here’s why.

The average salary of investment bankers in Canada is around C $65,000 per annum. However, there’s good news too. If you can stick to this industry for a few years, you will earn a decent salary. Have a look at the chart below –

Investment Banking in Canada

source: payscale.com

We will look at another chart below, which will draw an idea in your mind about bonuses and profit sharing as well –

Investment Banking in Canada

source: payscale.com

If we look at the bonus, we would see that it’s huge and certainly experience has a lot to do with the bonus you earn. If you have more experience, you would be able to earn even more than C $100,000 as a bonus.

Let’s look at the chart below, which shows how experience affects salaries in investment banking in Canada –

Investment Banking in Canada

source: payscale.com

If you look at the above chart, you will see that in most cases, experienced people get more salaries (and it is always upgrading year after year); but in the case of entry-level, the opposite is true. The salaries at entry-level are downtrodden.

But what happens when we look at the pay structure as per the experience?

Investment Banking in Canada

(source: payscale.com

From the above chart, we can understand a surprising thing. If we glance at payment as per the years of experience, we will see that when investment bankers have 10-20 years of experience, they earn around C $140,000 per annum, which is the sweet spot. After 20 years of experience, the salary declines and becomes around C $100,000 per annum.

That means we can conclude that the compensation reaches its saturation level at 20 years of experience as an investment banker in Canada. If the investment bankers don’t switch or start their funds or ventures, it would not be easy to keep earning more.

Investment Banking Exit Opportunities in Canada

Compared to the USA, investment banks in Canada have less obsession with exit opportunities.

The reason is most investment bankers love their jobs, and they love to stay in their jobs for a long period rather than switching careers.

However, you can still switch and go for an MBA. But in Canada, after MBA, rarely do people stick to investment banking. They go to different routes, especially in the banking industry (please note: not investment banking).

Also, look at this detailed guide to Investment Banking Exit Opportunities 

Conclusion

In Investment Banking in Canada, everything happens at a smaller level. But the environment is great, and there is an emerging market waiting to be explored. If you have experience in USA investment banks and want to work in Canada, barriers to entry for you would be none. Even if you pass out from a top-notch university in the USA, in Canada, investment banking would be a much more lucrative option for you, as there would be much less competition, and you can immediately take charge of the position.
However, if you’re from Canada, having enough passion and curiosity will do the trick for you.

This has been a guide to Investment Banking in Canada, their services offered, recruitment process, culture, list of top investment banks in Canada, investment banking salaries in Canada, investment banking jobs in Canada, and exit opportunities. You may also look at the following article to learn more about Investment Banking.

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Comments

  1. Ryan says

    Thank you sir . It was an amazing article just when i thought all hopes were gone for me your atricle came like a bright light to me . I was really uncertain of what I wanted to do in life cause i’m only 19 at the moment but investment banking is something that has always been on my mind .