Toronto is the rare city experiencing a construction frenzy (185 high-rises, to New York’s 80), a hiring spree (in the last quarter of 2011, while Bank of America and Citigroup fired almost 10,000 staff, our eight biggest banks added 2,800), and a surge in swaggering confidence. As our reputation for stability spreads, the world has begun to look at us differently. Many of the units in those 185 towers are owned by wealthy foreigners who see Toronto as a smart investment.
We owe this prosperity to Paul Martin. That’s one theory, anyway. Back in 1998, before we’d ever heard of sub-prime loans or credit default swaps or Volcker rules, Martin, then federal finance minister, stomped an imperious foot on CIBC’s plan to merge with TD and RBC’s with BMO. The banks’ chairmen were furious that a year’s worth of negotiations was all for naught. How were they expected to grow their already enormous businesses if they couldn’t merge? In hindsight, they should be grateful: kept to their size, they weren’t big enough to enter full-tilt into the delirious American market and, come 2008, end up like Merrill Lynch and Citigroup (forced to swallow billions in bad loans) or Bear Stearns and Lehman Brothers (RIP).
Martin’s edict paid off, especially for Toronto. Our banks—ranked top in the world for reliability, four years running—are finally on their coveted expansion spree, but instead of competing at the sub-prime racket, they’re buying up struggling American banks. TD has been the most aggressive, absorbing Banknorth for $6.7 billion, Commerce Bancorp for $8.33 billion, auto lender Chrysler Financial for $6.3 billion and South Financial Group for $191.6 million. It now has more branches in the U.S. than it does in Canada. A Canadian tourist in New York City, where the bank is the fifth-largest (with plans to soon become third), could be forgiven for experiencing a smug rush of manifest destiny.