Makalah Bank of Montreal Revisi
Makalah Bank of Montreal Revisi
Makalah Bank of Montreal Revisi
Expanding Globally
Exploring the History, Contributions to the Canadian Banking Industry, and Global
Growth Strategy of the Bank of Montreal
Compiled By :
: Azmi Icha
Name
Sepbrina
Nim : 2305072006
Class : BK - 3F
Subject : English Banking
Supporting : Budi Indra
Lecturer Syahdewa
JURUSAN AKUNTANSI
PROGRAM STUDI D3 KEUANGAN DAN PERBANKAN
POLITEKNIK NEGERI MEDAN
TA. 2024/2025
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Table Of Contents
Contents
FOREWORD..............................................................................................................................................iii
CHAPTER I.................................................................................................................................................1
INTRODUCTION........................................................................................................................................1
1.1 Background...............................................................................................................................1
1.2 Problem Formulation................................................................................................................1
1.3. Purpose..........................................................................................................................................1
CHAPTER II................................................................................................................................................2
DISCUSSION..............................................................................................................................................2
2.1 History of the Bank of Montreal (BMO)..........................................................................................2
Post-Confederation.................................................................................................................2
2.2 Bank of Montreal's contribution to the Canadian banking sector...................................................5
2.3 Bank of Montreal's Growth Strategy in the Global Market.............................................................7
CHAPTER III.............................................................................................................................................10
CLOSING..................................................................................................................................................10
3.1 Conclusion...............................................................................................................................10
3.2 Suggestion...............................................................................................................................10
REFERENCES............................................................................................................................................11
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FOREWORD
First and foremost, I would like to express my deepest gratitude to God Almighty for His
blessings and grace, which have enabled me to complete this paper titled “Pioneering
Financial Services in a Global Economy : Analyzing the role of the Bank of Montreal in
Shiping Canada’s Banking Industry and Global Presence”
The Bank of Montreal (BMO), founded in 1817, is one of Canada’s oldest and most prominent
financial institutions, having grown into a global banking leader. This paper aims to explore the
history of BMO, its contributions to Canada's banking sector, and its strategic growth in the
global market. Through this analysis, the goal is to provide a deeper understanding of how
BMO has maintained its position as an industry leader by continuing to innovate and adapt in
both the Canadian and international financial landscapes.
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CHAPTER I
INTRODUCTION
1.1 Background
The Bank of Montreal (BMO), founded in 1817, is not only one of Canada's most established
financial institutions but also a significant player on the global banking stage. With over two
centuries of history, BMO has evolved from a local bank serving the people of Montreal to a
multinational corporation offering a wide range of financial services across North America and
beyond. This paper explores the Bank of Montreal’s history, its role in shaping Canada’s
banking sector, and its strategic growth in the global economy.
Throughout its long history, BMO has demonstrated resilience, innovation, and adaptability in
response to changing financial landscapes. The bank has successfully navigated economic
challenges, regulatory shifts, and technological advancements while maintaining a strong
commitment to customer service and corporate responsibility.
In this analysis, we will examine how BMO has managed to maintain its leadership position in
an increasingly competitive and globalized market. We will also explore the bank’s strategies
for growth, its contributions to the Canadian economy, and its efforts in fostering financial
inclusivity. This paper aims to offer a comprehensive understanding of BMO’s legacy and its
future prospects in the evolving world of banking.
1.3. Purpose
The objectives are as follows :
1 Analyze the history of the Bank of Montreal
2 Find out what Bank of Montreal contributes to the Canadian banking sector
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CHAPTER II
DISCUSSION
As the banking industry grew in size and importance within Canada, the Bank of Montreal
joined with all other banks to create the Canadian Bankers Association in 1891. This
organization became the country’s clearing centre for business conducted between banks. In
1892, the bank became the official fiscal agent responsible for selling the federal government’s
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bonds in London, England, taking over from several English firms. This solidified the Bank of
Montreal as the principal banker for Canada, now both within and outside the country.
At the same time, the bank’s international presence grew when it opened its first branch in
Paris, France, also in 1918. The bank then purchased the Colonial Bank in 1920, which
operated primarily in the West Indies and West Africa, a transaction that encouraged it to
officially create a foreign department. Within Canada, it purchased the struggling Merchants
Bank of Canada in 1921, a move that added more than 400 branches across the country. A
merger with the Molson Bank followed in 1924, along with its 125 branches. Each of these
acquisitions aided the conversion of the Bank of Montreal to a bank with a strong retail deposit
base in addition to its historical business focus.
As was the case for many businesses in Canada, the Great Depression challenged the Bank of
Montreal. The number of bank branches shrunk from 669 in 1929, to 567 in 1934, and the
Mexican branch was closed in 1931. As the number of banks in the country declined due to a
combination of bank failures and mergers, popular discontent led by farmers encouraged the
federal government in 1934, on the recommendation of the federal Macmillan Commission, to
create a new central bank for the country, the Bank of Canada. After 117 years in the role, the
Bank of Montreal was forced to relinquish its position as official banker to Canadian
governments. This shift meant the Bank of Montreal lost its largest business customer.
Nevertheless, the bank quickly recovered and its assets exceeded $1 billion for the first time in
1939.
Second World War and Late 20th Century
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During the Second World War, all activity of the bank was focused on maintaining its business
and aiding in the war effort. In March 1942, George Spinney, general manager of the bank, was
assigned to head the federal government’s National War Finance Committee. The combination
of the depression followed by the war led to a reduction in the number of bank branches,
dropping from a high of 672 in 1930 to a low of 468 in 1943.
Post-war, Canadian banks resumed their growth. As a notable change, all banks were at last
authorized by the government to lend money to their customers to purchase real estate such as
homes and small businesses (see Mortgage). In 1954, the Bank of Montreal became the
first chartered bank to do so.
This change in policy marked a significant shift not only for the Bank of Montreal, but for all
Canadian banks. As a result, a bank’s portion of consumer assets such as loans and mortgages
grew remarkably, and its investment in government bond assets decreased, resulting in a riskier
asset profile for the bank. In addition, competition between banks for retail deposit customers
increased. To manage this growth in retail business, the Bank of Montreal opened its first data-
processing department in 1963. The competition between banks increased further when the
federal government removed the maximum interest rate a bank can charge on loans in 1968.
In 1963, American-owned Citibank took over the Mercantile Bank of Canada, raising fears that
foreign ownership of Canadian banks was set to increase. In response, the federal government
amended the Bank Act in 1967, limiting foreign ownership of banks to 25 per cent of total
shares. As the world economy grew and became more interconnected, Canada’s banks saw this
rule as a limit to their ability to grow and compete internationally. The Bank of Montreal
responded to this regulatory limitation by purchasing Chicago-based bank Harris Bancorp in
1984. This purchase was a bold move for a Canadian bank, based on a strategy to build a
significant presence for the Bank of Montreal in the Midwestern American marketplace. The
transaction made the Bank of Montreal the first bank in North America to have full operations
in both Canada and the United States. Ten years later, in 1994, the Bank of Montreal became
the first Canadian bank to list its shares for trading on the New York Stock Exchange.
To add further growth, banks began buying independent stock brokerage firms in Canada
(see Stock and Bond Markets). The purchases were meant to expand their presence in
investment banking in order to diversify their business outside of traditional banking. In 1987,
the Bank of Montreal participated in this strategy by buying a 75 per cent ownership stake in
brokerage firm Nesbitt Thomson, Inc. It expanded this area of business when it merged Nesbitt
Thomson with the oldest remaining independent brokerage firm Burns Fry in 1994. It renamed
the now wholly owned subsidiary BMO Nesbitt Burns. Now called BMO Capital Markets, this
arm of the bank contributes approximately 19 per cent to the organization’s total reported
earnings (2018).
More significantly, Bank of Montreal and Royal Bank of Canada, the country’s two largest
banks, shocked everyone when they announced their intention to merge in 1998 (see Royal-
Montreal Bank Merger). Their logic was to create a larger, single Canadian bank that would be
better able to compete internationally. However, the federal government prohibited this merger
on the grounds that it believed the country would be ill-served by fewer, larger banks. About
the same time, Canadian Imperial Bank of Commerce and Toronto-Dominion Bank were also
contemplating a merger (see CIBC-TD Merger).
21st Century
As an alternative to the merger, and to maintain a competitive growth rate, the Bank of
Montreal implemented several strategies. First, it augmented the bank’s international
operations when it purchased another Midwestern American bank, Marshall & Ilsley (M&I) of
Milwaukee, Wisconsin, for US$4.1 billion in 2010. This transaction added US$63.5 billion in
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deposits and 250 branches. Later, M&I was merged into the operations of BMO Harris Bank.
Several other small American bank acquisitions were also concluded at the time. Today, US
banking contributes 23 per cent to the Bank of Montreal’s total reported earnings (2018).
The Bank of Montreal also expanded its wealth management operations. To do this, it
purchased and merged several domestic and international investment management firms. In
2001, they purchased Toronto’s Guardian Group of Funds Ltd., in 2011 Lloyd George
Management of Hong Kong, and in 2014 the Foreign & Colonial Asset Management of the
United Kingdom. These firms were all in addition to Montréal-based Jones Heward Investment
Management, which the bank had acquired in 1994 with the purchase of Burns Fry. In 2018,
the wealth management component of Bank of Montreal contributed approximately 17 per cent
of its total reported earnings.
The Bank of Montreal has also added to other segments of its operations through acquisition.
For example, it expanded into life insurance with the purchase of the troubled US-based AIG
Life Insurance Company of Canada in 2009. That same year, the bank acquired the
Canadian credit card franchise operations of Diners Club North America. In 2015, the bank
purchased General Electric’s transportation finance unit, the largest financer to the commercial
truck industry in North America, for US$13 billion.
The investment banking business of BMO Capital Markets has continued to grow in the United
States. In 2016, the bank acquired merger and acquisition advisory firm Greene Holcomb
Fisher of Minneapolis, Minnesota. In 2018, it acquired New York-based fixed income broker-
dealer KGS-Alpha Capital Markets.
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BMO is renowned for its commitment to innovation in financial products and services. One of
its most important contributions was the early adoption of online and mobile banking in the late
1990s, making BMO one of the first banks in Canada to provide digital banking services to its
customers. This innovation not only improved convenience and efficiency for consumers but
also set a benchmark for other Canadian banks to adopt similar technologies. Furthermore,
BMO has introduced various innovative financial products, including high-interest savings
accounts, rewards credit cards, and investment solutions, which have made it easier for
individuals and businesses to manage their finances.
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BMO has a strong commitment to corporate social responsibility (CSR), focusing on
environmental sustainability and community empowerment. The bank has made significant
investments in green projects and initiatives aimed at reducing its environmental footprint.
BMO also supports various programs that promote financial literacy and financial inclusion,
ensuring that underserved communities have access to essential banking services. By
integrating sustainability and social impact into its core business model, BMO helps address
key social challenges in Canada while positioning itself as a leader in responsible banking
practices.
The Bank of Montreal (BMO) has pursued a range of strategic initiatives to expand its presence
in global markets, focusing on growth, innovation, and operational efficiency. According to
various resources on BMO’s official website and financial reports, here are some of the key
elements of their growth strategy in the global market:
BMO has focused on expanding its footprint beyond Canada, particularly in North America.
The bank has made strategic acquisitions to increase its presence in the United States, which is
one of its largest markets outside of Canada. For example, the acquisition of M&I Bank
(Marshall & Ilsley Corporation) in 2011 was a major step that allowed BMO to significantly
increase its operations in the U.S., expanding its retail and commercial banking operations.
Furthermore, BMO has targeted specific international markets for expansion, including key
cities in Europe and Asia, to build out its global network. Its approach includes focusing on
high-growth regions where trade and investment flows are increasing, allowing BMO to
leverage its expertise in cross-border financial services.
BMO has invested heavily in technology to enhance its digital capabilities and expand its
customer base globally. The bank’s focus on digital banking includes developing cutting-edge
platforms for mobile banking, online financial management, and AI-driven financial services.
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These technological investments allow BMO to serve customers globally, providing convenient
banking solutions that cater to the needs of both retail and corporate clients.
BMO has strategically diversified its financial offerings to meet the needs of a wide range of
customers in different international markets. The bank has expanded its portfolio to include not
only traditional banking services but also wealth management, investment banking, and capital
markets services. By doing so, BMO is able to serve a broader client base, including
individuals, small businesses, and large multinational corporations.
In addition, the bank has focused on providing specialized services such as trade finance,
foreign exchange, and global investment solutions, which are critical for businesses involved in
international trade and investment. This diversification allows BMO to be more competitive in
the global market by meeting the needs of both personal and institutional clients.
BMO’s Sustainable Finance Group supports clients worldwide by offering financing solutions
that help them meet their sustainability goals. The bank is also focused on expanding its green
bond offerings and developing sustainable investment products that appeal to global investors
interested in ESG-focused financial solutions.
In addition to organic growth, BMO has pursued strategic partnerships and alliances to
strengthen its global position. By partnering with other financial institutions and technology
companies, BMO is able to leverage complementary strengths and expand its product offerings
in new markets. For example, BMO has partnered with fintech companies to integrate
advanced digital tools into its banking platforms, improving its competitiveness in the global
digital banking space.
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BMO has also formed partnerships with leading corporations and government entities to
expand its services in international markets. These alliances allow BMO to participate in large-
scale financing projects and major international initiatives, further establishing its presence as a
global financial institution.
The U.S. market remains a major focal point for BMO’s international expansion. Beyond the
acquisition of M&I Bank, BMO has continued to grow its U.S. operations, particularly in
commercial banking and capital markets. The bank has made significant investments in U.S.-
based businesses and continues to focus on strengthening its position through new product
offerings and enhanced customer service.
BMO has also worked to align its operations in the U.S. with its global sustainability goals,
ensuring that its financing activities in the U.S. support environmentally responsible projects
and initiatives. This focus on the U.S. market has been a key driver of BMO’s growth in the
global arena.
As BMO expands globally, the bank maintains a strong focus on risk management and
operational efficiency. The global nature of its operations requires sophisticated systems to
manage risks related to currency fluctuations, geopolitical events, and regulatory changes in
different countries. By investing in advanced risk management tools and ensuring compliance
with local and international regulations, BMO can mitigate risks and ensure stable growth in
foreign markets.
Moreover, BMO is continuously working on optimizing its internal operations through cost-
efficiency programs and automation to ensure its global operations remain
competitive and profitable.
CHAPTER III
CLOSING
3.1 Conclusion
The Bank of Montreal (BMO), founded in 1817, is the first bank in Canada and has played a
crucial role in shaping the country’s banking system. BMO has significantly contributed to the
Canadian banking sector by introducing essential services such as savings and loans, while also
supporting the development of capital markets and corporate financing. Its innovations in
banking products, including digital banking, have enabled the bank to provide more efficient
services to individuals and businesses.
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In terms of its global growth strategy, BMO has focused on international expansion,
particularly in the United States, through acquisitions and operational development.
Additionally, BMO continues to invest in digital technology and sustainability, offering
environmentally friendly financial solutions. Overall, BMO has strengthened its position as a
banking leader in Canada and globally through innovation and a clear expansion strategy.
3.2 Suggestion
BMO should continue investing in digital technologies like AI and blockchain to enhance
customer experience and operational efficiency. Expanding its presence in emerging markets
such as Asia and Latin America will offer growth opportunities in trade finance and investment
banking.
The bank should also increase its focus on sustainability by financing renewable energy
projects and offering ESG-focused products to strengthen its leadership in responsible banking.
Additionally, BMO can improve customer engagement by offering more personalized services
based on data analytics, fostering greater loyalty. Lastly, forming strategic partnerships with
fintech companies and global financial institutions will keep BMO competitive in a rapidly
evolving market.
By focusing on these areas, BMO can strengthen its position in both the Canadian
and global markets.
REFERENCES
1. https://en.wikipedia.org/wiki/Bank_of_Montreal
2. https://www.thecanadianencyclopedia.ca/en/article/bank-of-montreal
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