Photo: A Bank of Montreal branch at the corner of Queen Street East and Yonge Street in downtown Toronto.
Bank of Montreal / Banque de Montréal
In 1817, a group of businessmen founded the Montreal Bank in the largely French-speaking British colony of Lower Canada (present-day Québec). Right from the start, the Montreal Bank, the very first bank in Canada, issued its own banknotes for circulation, which was a common practice at the time before central banks around the world took over the issuance and control of currencies in the 20th century. The Montreal Bank also provided business loans, accepted customer deposits, and underwrote bills of exchange for foreign trade. Within a few months of its founding, the Montreal Bank established agencies in Quebec City and Toronto in Ontario (then known as York in Upper Canada). By 1818, agents were also appointed in New York City and London.
In 1822, the Montreal Bank obtained a charter from the Lower Canada legislature and renamed itself the Bank of Montreal, or Banque de Montréal in French. Throughout the early 19th century, the bank was pivotal in financing Canada’s infrastructure, such as the Lachine Canal, Canada’s first railway between Champlain and St. Lawrence, and the Grand Trunk Railway between Montreal and Sarnia, Ontario.
In 1824, however, wary Upper Canadian politicians passed legislation prohibiting banks chartered outside of the colony from operating in Upper Canada, forcing Bank of Montreal to shut its Upper Canadian offices. It wasn’t until 1842 when the two colonies amalgamated to form the Province of Canada that the bank was allowed back in present-day Ontario.
Internationally, Bank of Montreal has a long history in the United States. As soon as a railway linking Montreal and New York City was completed in 1859, a permanent office was opened in Manhattan. With the ever rising wheat exports from the U.S. Midwest to Quebec, the bank opened a permanent agency in Chicago in 1861. Interestingly, most of the Midwest’s wheat exports to Montreal were destined for the Molson brewery.
In 1864, the bank was appointed as the fiscal agent of the Province of Canada. As Canada’s largest bank, Bank of Montreal at times advanced loans to the government which was in financial distress. The 1867 Confederation of Canada saw the bank promptly opening new branches in Saint John, New Brunswick and Halifax, Nova Scotia. In the 1880s, the bank became a principal financer to the Canadian Pacific Railway, Canada’s first trans-continental railway linking British Colombia to the east coast. As the young nation expanded, Bank of Montreal opened its first branch in Winnipeg in 1877, Vancouver in 1887, and the then still British colony of Newfoundland in 1894. (Newfoundland only joined Canada in 1949.)
A rapid phase of consolidation in the early 20th century saw a great expansion in the bank’s nationwide network. It took over the Exchange Bank of Yarmouth in 1903, the People’s Bank of Halifax in 1905 and the People’s Bank of New Brunswick in 1907. In 1918, Bank of Montreal acquired the Bank of British North America (founded 1836) and its 79-branch network. In 1922, the 400-strong branch Merchants Bank of Canada (founded 1861) was amalgamated into Bank of Montreal. In 1925, the bank merged with Molsons Bank (founded 1853), gaining another 125 branches. The Molson family, of the brewery fame, has had close ties with the bank since 1823.
During World War I, Bank of Montreal set up temporary offices at encampments across Canada to pay the troops. Its branch at Waterloo Place in London distributed mail and payroll for the soldiers stationed in Europe, making the branch a central meeting place for the overseas troops.
Following the recommendation of the Macmillan Commission and a worldwide trend, the Bank of Canada was created in 1934 to take over central bank functions like the issuance of the Canadian dollar, regulation of credit and banks, and the management of government debentures. Bank of Montreal’s banknotes, first issued in 1817, were gradually withdrawn and destroyed.
Like other banks in the country, the bank took an active role in marketing and selling Victory Loan war bonds during World War II. Many employees also joined the troops and fought on battlefields.
New legislation in the 1950s aimed at promoting home ownership and stimulating the economy allowed the chartered banks to offer residential mortgages for the first time. Bank of Montreal has the distinction to be the first bank in Canada to write a mortgage loan in 1954.
In 1963, the bank installed a cheque-sorting system, allowing branches to issue daily print-outs of customer accounts, a technological breakthrough at the time. Between 1975 and 1980, it became the first Canadian bank to connect all its branches together using a central mainframe, enabling real-time updates on customer account balances for the first time.
In 1984, Bank of Montreal acquired Chicago-based Harris Bancorp Inc. to gain a foothold in the U.S. regional market. Then in 1986, Canada’s “Big Bang” (deregulation of the financial industry) came into effect, allowing for the first time since the 1930s commercial banks, securities underwriters, trust companies and insurance companies to cross-sell each other’s products. In 1987, Bank of Montreal bought securities dealer Nesbitt Thomson, Inc.
Harris Bancorp
In 1882, an insurance executive named Norman Wait Harris arrived in Chicago and started N.W. Harris & Company. The company underwrote Chicago municipal bonds to finance the building of roads, sewage system and schools etc. The investment underwriter grew rapidly and by the early 1900s, customers had deposited so much univested cash at the investment house that Mr. Harris converted N.W. Harris & Co. into Harris Trust & Savings Bank. During the 20th century, Harris became a leading retail bank in the Chicago area. In 1960, it acquired Chicago National Bank and in 1982, bought the first of many neighbourhood banks in the Midwest. In 1984, Harris Bancorp was acquired by Bank of Montreal.
Recent transaction(s):
- In 1994, Nesbitt Thomson bought another venerable investment dealer Burns Fry Ltd. for CAD $403-million and renamed the new operations Nesbitt Burns.
- Also in 1994, BMO’s Harris Bank subsidiary bought Suburban Bancorp.
- In 1996, Harris bought the Chicago branches of Household Bank.
- In 2001, Harris acquired the First National Bank of Joliet.
- In 2004, Harris bought Mercantile Bancorp.
- Also in 2004, Harris bought New Lenox State Bank.
- In 2006, Harris bought Indianapolis-based First National Bank & Trust for USD $290-million.
- In 2007, Harris bought Milwaukee-based Ozaukee Bank for USD $190-million. Ozaukee Bank had 6 full-service and 2 limited-service branches in the city.
- Also in 2007, Harris bought Merchants and Manufacturers Bancorporation for USD $137-million. Merchants and Manufacturers was the holding company of 6 different banks. Together the 6 banks operated 34 full-service branches and 11 limited-service offices.
- In 2009, Bank of Montreal bought AIG Life Insurance Company of Canada for CAD $375-million from American International Group Inc. The purchase made Bank of Montreal the second largest life insurer out of the Big Five banks.
- In November 2009, Bank of Montreal bought Diners Club credit-card's North American business from Citigroup for an undisclosed amount. Diners Club U.S. had USD $7.8-billion of card transactions in 2008. The purchase would double Bank of Montreal's credit-card transaction volume to USD $11-billion per annum.
- In April 2010, Bank of Montreal acquired the bankrupt Amcore Bank of Rockford, Illinois, from the Federal Deposit Insurance Corp. Amcore Bank had 52 branches in Illinois and Wisconsin.
- In December 2010, Bank of Montreal agreed to acquire Milwaukee, Wisconsin-based Marshall & Ilsley Corp. (M&I Bank) for USD $4.1-billion (CAD $4.1-billion) in stock. Marshall & Ilsley operated 192 offices in Wisconsin, 53 in Arizona, 36 in Florida, 33 around Indianapolis, 27 in Minnesota, 17 around St. Louis, 15 around Kansas City and one in Las Vegas. The purchase would increase BMO's U.S. branches from 321 to 695. BMO wrote off USD $4.7-billion of questionable M&I assets, as well as repaid USD $1.7-billion of TARP bailout fund to the U.S. government when the purchase was completed in July 2011.
- In January 2011, BMO acquired Hong Kong-based portfolio manager Lloyd George Management for an undisclosed amount. Lloyd George specialized in Asia and emerging markets and had USD $6-billion (HKD$ 46.5-billion, CAD $5.91-billion) in assets under management.
- In 2012, BMO acquired a 19.99% stake in China's COFCO Trust Company. Financial terms of the deal were not announced. COFCO had USD $5.7-billion of assets under management. The 19.99% stake was the maximum allowed for a foreign investor of a Chinese financial firm.
- In January 2014, BMO acquired Britain's F&C Asset Management plc for GBP 708-million (CAD $1.3-billion). F&C was founded in 1868 as the Foreign & Colonial Investment Trust and is the world's first investment trust fund. F&C's GBP 82-billion (USD $136-billion) of assets under management will double BMO's global asset management arm, which had USD $133-billion (CAD $149-billion) of assets under management before the purchase.
- In September 2015, BMO agreed to acquire GE Capital's transportation-finance business. The unit had USD $8.7-billion (CAD $11.5-billion) of assets, 600 employees and 15 offices in the U.S. and Canada. Exact terms were not disclosed, but the final price would be based on the value of the assets at closing, plus a premium.
- In December 2021, BMO announced that it was buying French bank BNP Paribas' San Francisco-based Bank of the West for USD $16.3-billion (EUR 14.4-billion, CAD $21.07-billion) in cash. The acquisition cost net of Bank of the West's excess capital of USD $2.9-billion would be USD $13.4-billion. Bank of the West served 1.8 million clients through 514 branches in 24 states (primarily in the U.S. West Coast and Midwest) with 9,000 employees. The acquisition would add US$105 billion of assets and US$89 billion of deposits to Bank of Montreal's existing American subsidiary BMO Harris Bank, which has 524 branches mostly in the U.S. Midwest.
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