Bank of Montreal (BMO Financial Group)

Date founded: 1817

Industry: Banking, financial services

Corporate headquarters: Montreal, Quebec, Canada

Type: Public

Overview

Formally known as BMO Financial Group and often referred to simply as BMO, the Bank of Montreal is a major financial institution and one of Canada’s so-called “Big Five” banks. Founded in 1817, the Bank of Montreal ranked eighth in North America and fourth in Canada in January 2023, with a total of CAD$1.4 trillion in assets. The company also served more than 12 million customers globally as of that date. Its services included personal banking, business and commercial banking, investment banking, and wealth management. The Bank of Montreal has operated under various branded names, serving commercial and personal customers as BMO Bank of Montreal, wealth management clients as BMO Nesbitt-Burns, and corporate and institutional investment clients as BMO Capital Markets. In the United States, the firm has operated as BMO Harris Bank and BMO Private Bank and under the BMO Capital Markets name. In total, the Bank of Montreal maintained more than 1,500 branches across Canada and the United States in the early 2020s, along with corporate offices in twenty-seven different jurisdictions.

The chief executive officer of BMO Financial Group oversees all operations and heads the bank’s fifteen-member board of directors. The bank’s board of directors functions independently from its upper management body. Its members participate in focused committees that work in four critical areas: auditing and internal conduct, corporate governance, risk analysis and review, and human resource management. A public company, Bank of Montreal stock trades in Canada on the Toronto Stock Exchange (TSE) and in the United States on the New York Stock Exchange (NYSE).

History

BMO Financial Group was founded as Montreal Bank in 1817. It was the first bank to formally incorporate in what is now Canada, and it became the official financial institution of the Province of Lower Canada (Quebec) shortly after its founding. The institution changed its name from Montreal Bank to Bank of Montreal when it became a publicly traded company in 1822. The government of the United Province of Canada—which was formed by the 1841 merger of Lower Canada and Upper Canada—selected the Bank of Montreal as its official financial institution in 1864. The firm expanded into the eastern provinces of New Brunswick and Nova Scotia in 1867, the year Canada confederated into a single nation.

The Bank of Montreal made aggressive moves into the industrial lending sector as Canada’s post-Confederation economy and transportation infrastructure developed. In 1874, the Bank of Montreal further diversified its operations and services to include investment banking. During the 1880s, the bank marked another major milestone when it became Canada’s sole authorized seller of federally issued government railway bonds. By the end of the decade, the Bank of Montreal was also dealing in corporate bonds and was operating coast-to-coast thanks to new branches in Winnipeg, Calgary, and Vancouver.

At the turn of the twentieth century, the Bank of Montreal had fifty-two locations across Canada. In the years leading up to the Great Depression, the firm continued its strategy of rapid growth, expansion, and consolidation. A series of mergers and acquisitions defined this period while the bank also played a critical role in financing the Canadian war effort during World War I (1914-1918). By 1929, the Bank of Montreal had grown to include 669 branches before declining to 567 locations in 1934. The following year, the Canadian federal government created the Bank of Canada to serve as the nation’s reserve bank, ending the Bank of Montreal’s long run as the nation’s official federal financial institution.

After contracting to a low of 468 branches in 1943, the Bank of Montreal resumed its strong growth during the economic boom that followed World War II (1939–1945). In 1954, the Bank of Montreal became the first Canadian financial institution to offer mortgage loans to private property buyers. Thirty years later, the bank made the decision to buy Harris Bancorp of Chicago, making it the first North American financial institution to operate in both Canada and the United States. After a proposed merger with the Royal Bank of Canada was nixed by the Canadian government in 1998, the Bank of Montreal continued to expand internationally. It also continued to increase its footprint in the wealth management and investment banking sectors. In 2022, the Bank of Montreal ranked forty-second in Standard & Poor’s annual list of the world’s largest banks by assets under management.

Impact

In the twenty-first century, the Bank of Montreal continued to occupy a primary position in the Canadian financial services industry. However, from a historical perspective, its greatest impact occurred during the bank’s period as Canada’s official federal financial institution from 1864 to 1935. During this time, the Bank of Montreal was a major industrial and commercial lender, and its financing activities helped fuel the rapid growth of Canada’s economy during its early years of nationhood. It was particularly impactful in the development of Canada’s logging and railroad industries. It was also the primary provider of funding for the industrialists who built the Canadian Pacific Railway, which delivered a vital cross-country transportation network.

During World War I, the Bank of Montreal financed government payments to members of Canada’s armed forces. Because of its strong nationwide presence, the Bank of Montreal was also a preferred provider of Victory Bonds. These were issued by the Canadian federal government to serve as a source of financing for the ongoing war effort.

As the twentieth century continued, the bank embraced a business model built around mergers, acquisitions, and expansion into emerging and foreign markets. This strategy enabled the Bank of Montreal to make a strong recovery from losing the Canadian federal government as its largest institutional client.

The Bank of Montreal also helped many Canadians achieve home ownership when it became the first chartered financial institution to offer private mortgage loans. Through its commercial mortgage wing, the Bank of Montreal continued to exert major influence over the growth of the Canadian economy during the second half of the twentieth century.

Bibliography

“Bank of Montreal.” Bloomberg, www.bloomberg.com/profile/company/BMO:US. Accessed 30 Apr. 2023.

“BMO History—Celebrating 205 Years.” BMO Financial Group, 2022, history.bmo.com. Accessed 30 Apr. 2023.

Bonham, Mark S. “Bank of Montreal (BMO).” The Canadian Encyclopedia, 27 Aug. 2021, www.thecanadianencyclopedia.ca/en/article/bank-of-montreal. Accessed 28 Apr. 2023.

Denison, Merrill. Canada’s First Bank: A History of the Bank of Montreal, Volumes 1-2. McClelland & Stewart Ltd., 1967.

“Darryl White.” BMO Financial Group, 2019, www.bmo.com/home/about/banking/corporate-information/executive-bios/darryl-white. Accessed 28 Apr. 2023.

Mehmood, Jahan Zaib and Saqib Chaudhry. “The World’s 100 Largest Banks.” Standard & Poor Global, 6 Apr. 2018, www.capitaliq.spglobal.com/web/client?auth=inherit#news/article?id=44027195&cdid=A-44027195-11060. Accessed 28 Apr. 2023.