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Toronto Financial Services Sector

Toronto is both the financial services capital of Canada and the fastest growing financial centre in North America. The World Economic Forum has ranked Canada as the soundest financial system in the world 6 years in a row. The Toronto Stock Exchange is the third largest in North America, after New York and Chicago. 

Toronto's central geographic location shares a time zone and borders the world's largest concentration of economic activity - New York, Boston and Washington- which makes Toronto an ideal market to head-quarter North American operations. Indeed, Toronto is only a 75 minute flight from New York, Chicago, and Boston - the major U.S. financial centers.

Toronto's financial services sector is one of the largest contributors to the local economy as well. Over 229,000 people are employed in a variety of functions in Toronto's financial services sector (City of Toronto, 2012). (See Figure 1).

  • Toronto's financial services sector contributes 13.2% directly, and 7.9% indirectly to the GDP of the Toronto region.
  • Between 1999 and 2009, the financial services sector added 69,000 jobs - a cumulative growth rate of 42%, or an average annual growth rate of 4.2%.
  • The Toronto region directly employs 30% of Canada's financial services sector.

Banking

  • Toronto is home to the worlds soundest banks
  • Toronto is home to the 5 largest banks in Canada.
  • 89% of foreign banks have their head-offices within the Toronto CMA (80% in Toronto city).
  • There are 10 domestic banks, 18 foreign bank subsidiaries, and 21 foreign branches located in Toronto.
  • 4 of the 5 largest domestic investment management firms have head-quarters in Toronto.

Pension fund management

  • Toronto represents 80% of investment management/MF industry representing C$700 billion assets under management (AUM).
  • 3 of Toronto's public pension plans rank among the top 60 in the world.
  • 58 pension fund managers, and 3 of the top 50 global pension funds with combined assets of over US$300 billion are in Toronto.
  • Toronto's global assets under management (AUM) ranks amongst the top 5 in the world.

Capital Markets

  • The Toronto Stock Exchange is the 3rd largest exchange in North America, and 7th largest in the world by market capitalization and 2nd globally in number of listings.
  • The Toronto Stock Exchange and Venture Exchange are the global leaders for mining and clean tech company listings.
  • During the recent global economic crisis Canada's capital formation activity outpaced the United States in IPOs by a ratio of 2 to 1.
  • 129 securities firms are located in Toronto.

Insurance

Financial Technology

  • Toronto is a centre for technology and financial services
  • Toronto is home to many prominent financial services technology providers, including: CIBC Mellon, State Street, RBC Dexia, Citco, UBS, Northern Trust, Goldman Sachs, Merrill Lynch Technology. With roughly 20,000 of those directly supporting fund administration.
  • 7 out of top 10 hedge fund administrators are located in Toronto.

Investments in Technology

  • Between 1996 and 2008, the largest banks collectively spent $48.6 billion on investment technologies. $5.9 billion was spent in 2008 on investments concentrated in Toronto-based operations.
  • In a 17-country study, Ernst & Young identified Toronto-based financial firms as global leaders in electronic banking and alternative service solutions.

The Organisation for Economic Co-operation and Development (OECD) has described the activity and strength across Toronto's financial service sector as being unusually broad in comparison to other leading international financial centres. The OECD Toronto Territorial Review released in 2010 found that the sector is supported by a critical mass of legal, accounting, technology and other support services. These services are reinforced by a strong base of academic institutions who cultivate the talented workforce.

The Global Financial Center Index 8 described Toronto as a broad and deep global centre of finance, and ranked it third in North America (See Figure 2).

Figure 2

GFCI 8 Financial Centre Profiles
/Business-Toronto/Sectors/Finance/GFCI-8-Financial-Centre-Profiles.aspx

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Toronto Financial Service Leadership

Centre of Excellence in Financial Services Education

The Centre of Excellence in Financial Services Education was create to be the catalyst that strengthens and expands Toronto 's talent pool to elevate the City's global stature as a financial services capital.

Using research, cross-sector collaboration and marketing, the Centre of Excellence is expected to:

  • Aggregate research and information on Toronto's talent and educational strengths for the benefit of educators, employers and students/graduates.
  • Work with employers and educators to improve the focus and quality of education programs.
  • Encourage a cross-sector dialogue on talent and education-related issues.
  • Showcase the region's strengths and the career opportunities that await in the Toronto region.

Toronto Centre: Leadership in Financial Supervision

The Toronto Centre was established following the 1997 Asian financial crisis. Its mission is to help financial regulators from around the world improve their crisis preparedness and develop stronger, more inclusive financial systems.

The Centre is funded by the Government of Canada, York University and the World Bank. Its sponsors include the International Monetary Fund (IMF), the US Agency for International Development (USAID), and the Inter-American Development Bank (IDB), among others.

Global Risk Institute in Financial Services

The Global Risk Institute in Financial Services (GRi) is a collaborative effort between the Toronto Financial Services Alliance, a partnership of the City of Toronto and the financial services industry, and the governments of Canada and Ontario. The target launch date for the Institute is January 2011.

GRi will :

  • Be a world-class centre for research and training across multiple financial risk management and regulatory disciplines;
  • promote the Canada brand and advantage by building on the strong reputation of Canada's financial institutions and regulatory system and Toronto's status as a premier financial services centre; and
  • work in partnerships with universities, the financial services industry, regulators and central banks, as well as domestic (all levels) and international governments

International Centre for Pension Management

The Rotman International Centre for Pension Management (ICPM) is a located at the Rotman School of Management at the University of Toronto. The Centre is supported by an international consortium of 15 major pension organizations. The mission of the ICPM is to foster integrative thinking about optimal 'pension deal' design, 'pension deal' financing, and the effective design and management of pension organizations.

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Competitive Advantages of the Financial Service Sector

Access to Skilled Talent

The Toronto region has a very competitive financial services talent pool. Toronto has a higher percentage of post-secondary graduates than New York or Chicago, and is on par with Boston. There are 4 universities and 4 colleges in the City of Toronto, and an additional 16 publicly funded universities and 20 publicly funded colleges in Ontario all serving the Toronto market. The Toronto region is home to more than 7,000 Chartered Financial Analysts (CFAs), the second highest concentration of CFAs in the world, after New York.

  • More than 79% of the financial services sector's employees hold post-secondary credentials - well ahead of the regional industrial average.

Diversity of Languages Spoken

Over 100 languages are spoken in the Toronto region; in addition to English, 10 of these languages are spoken by over 100,000 people.

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Top Employers

Top Toronto-based Banks

by Market Capitalization and Assets

Company 2012 Q1 Market Cap.
($ billions)
Company 2012 Q1 Assets
($ billions)
Sources: Annual Reports and Company Websites
RBC Financial Group 75.5 RBC Financial Group 815
TD Bank Financial Group 70.1 TD Bank Financial Group 774
Scotiabank 62.5 Scotiabank 660
BMO Financial Group 37.7 BMO Financial Group 538
CIBC 30.7 CIBC 391

Top Life Insurance Companies

Rank Company 2011 Revenues
($ billions)
Sources: Annual Reports and Company Websites
1 Manulife Financial Corp. 50.9
2 Sun Life Financial Inc. 22.6
3 RBC Life Insurance 4.5
4 Empire Life 0.8
5 Transamerica Life 0.1

Top Mutual Fund firms

Rank Company 2011 AUM ($ billions)
Source: IFIC Website
1 RBC Asset Management 252
2 Fidelity Investments Canada 64
3 Mackenzie Financial 63.4
4 Invesco Trimark 62.5
5 BMO Financial 61.9
6 CIBC 51.4
7 AGF Investments Inc 46
8 Dynamic Funds 40.4
9 TD Asset Management 40
10 Scotia Securities 23.4

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Table from the Global Financial Centers Index 9 groups Toronto as a leading global financial centre.
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