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CANADA’S COMPETITIVE ADVANTAGES

FINANCIAL SERVICES

CANADA’S FINANCIAL SERVICES SECTOR

ONE OF THE STRONGEST BANKING

SYSTEMS IN THE WORLD

In 2016-2017, the World Economic Forum ranked

Canada’s banking system the third soundest in the

world. Two of the world’s top 20 strongest banks

(Canadian Imperial Bank of Commerce and Desjardins Group)

are Canadian, according to Bloomberg Markets 2015.

Additionally Global Finance places six Canadian banks

among the 9 safest in North America. These findings

reflect the sector’s continued strong performance.

Canada has one of the strongest financial-services sectors in the world, comprised of banks, trust and loan companies, insurance companies, credit unions, securities dealers, finance and leasing companies, pension-fund managers, mutual-fund companies and independent insurance agents and brokers. Finance and insurance activity contributed $120.1 billion to GDP1 and employed 721,457 Canadians2 in 2016. Foreign direct investment in Canada’s financial and insurance industries reached an accumulated $121.5 billion in 20163. Combined with prudent regulatory oversight, this stable, diversified and well-funded base means significant growth opportunities for foreign investors. The Canadian banking sector includes 32 domestic banks, 25 foreign-bank subsidiaries, 28 full-service foreign-bank branches, four foreign-bank lending branches and 18 foreign-bank representative offices.4

VIBRANT INSURANCE SECTOR Three Canadian life and health insurers—Manulife Financial, Great-West Life Assurance Co. and Sun Life Financial Inc.—are among the world’s 20-largest life and health-insurance firms. Additionally there are over 100 life and health insurance providers in Canada with total assets of $721.2 billion5. In 2016, Canada’s insurance industry employed 218,836 people6.

ASSET AND WEALTH MANAGEMENTCanadian capabilities encompass all aspects of asset and wealth management—financial planning, portfolio management, retail banking, estate planning, financial-statement analysis, asset and stock selection, plan implementation and monitoring of investments. In Canada, 140 hedge-fund management companies manage over $35 billion in assets (Alternative Investment Management Association), as well Canadians invested over $1.4 trillion in mutual funds as of May 20177.

FINANCIAL TECHNOLOGY SECTORAccording to the Canadian Bankers Association, in 2015, Canada’s largest six banks spent $10 billion on technology—an amount forecast to increase to $14.8 billion by 2018. Much of Canada’s financial-technology sector is based in the Toronto-Waterloo corridor, Montreal, Calgary and Vancouver, and is strongly linked to the major banks, leading universities and a thriving start-up culture. In both regions, labs, incubators and accelerators, such as Ryerson Digital Media Zone and MaRS in Toronto and the Generator in Vancouver, are well situated to enable rapid, distraction-free innovation. Furthermore, companies in the sector leverage the wealth of payment-processing resources available in Canada, including: Canadian Prepaid Providers Organization, Canadian Payments Association, Fintech Association of Canada, Interac, MasterCard and Visa. Canada is a global leader in fostering innovation and company creation in the financial-technology sector. Two factors that support this leadership are the rapid adoption of new technologies by top Canadian banks, and active investment in the sector by leading Canadian venture-capital funds such as OMERS Ventures and Information Venture Partners.

1 Statistics Canada CANSIM tables 379-0031

2 Statistics Canada, CANSIM tables 281-0024

3 Statistics Canada, CANSIM Table 376-0052, FDI in Canada, finance and Insurance, Book value.

4 Office of the Superintendent of Financial Institutions

5 Canadian Life and Health Insurance Association

6 Statistics Canada, CANSIM Table 281-0024.

7 Investment Funds Institute of Canada

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UNITED STATES OF AMERICA

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NOVASCOTIA

NORTHWEST TERRITORIES

Montréal

Ottawa

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Québec City

Winnipeg

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Calgary

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Niagara

Halifax

WaterlooLondon

RECENT INVESTMENTS

CANADA’S FINANCIAL SERVICES SECTORS is

spread out across the country, with large hubs

in Toronto, Montréal, Calgary and Vancouver.

FINANCIAL SERVICES CLUSTERS

BRITISH COLUMBIA: Vancity, Agricultural Bank of China, HSBC, Zafin, SnapFinancial, VeriClaim, CTBC Bank Corp, Versant Ventures, Global Aerospace, KEB Hana Bank, Macquarie Capital Markets.

ALBERTA: Canadian Western Bank, Goldman Sachs, Acumen Capital, FirstEnergy Capital, Peters & Co, Société Générale, UAE Exchange Centre, Kohlberg Kravis Roberts, TCI Business Capital, Azure Capital Partners, Burns & Wilcox Canada.

SASKATCHEWAN: Assante Wealth Management, Edward Jones Canada, Cashco Financial, PFM Capital Inc, Conexus.

MANITOBA: IGM Financial, Great West Life, Wawanesa Mutual Insurance Company, Manitoba Public Insurance Corporation, National Leasing Company.

ONTARIO: Bank of China, Barclays Capital, ICICI Bank, Korea Exchange Bank, State Bank of India, AGF Management, Canadian Imperial Bank of Commerce, Manulife, Royal Bank of Canada, Sun Life, TMX Group, TD Canada Trust, Citigroup, Industrial and Commercial Bank of China, Macquarie Group, Shopify, Financeit, Phoenix Interactive, D+H, Nymi, SecureKey, RateHub, Square, Bank of Nova Scotia.

QUEBEC: Merrill Lynch, Bank of Montreal, Desjardins Group, Laurentian Bank of Canada, Banque Transatlantique, BNP Paribas, Crédit Agricole, Blockstream, Lightspeed Retail, National Bank of Canada, Wells Fargo & Company, VeriClaim, Gold Finance, Attijariwafa Bank, Charles Taylor Adjusting, R3 Funding, White Star Capital.

NOVA SCOTIA: Citco, Maitland, Wagepoint, Jardine Lloyd Thompson, Butterfield Fulcrum, Burns & Wilcox.

NEW BRUNSWICK: Assumption Life, ING Direct.

NEW FOUNDLAND AND LABRADOR: Verafin.

PRINCE EDWARD ISLAND: Invesco.

In 2017, US-based PayPal, an online payments company, opened a new

office in Toronto, Canada. The company will operate out of a 725 sq. m space

and has created 25 new jobs.

In 2017, VeriClaim [Subsidiary of Sedgwick Claims Management],

a global provider of loss adjusting and claims management solutions expanded its Canadian operations

by opening offices in Montreal (Quebec), Edmonton (Alberta) and

Richmond (British Columbia).

In 2016, XL Catlin’s global professional business of XL Group,

an Ireland-based insurance and reinsurance company established a new office in Toronto, Canada.

CANADA’S ADVANTAGES

ONE OF THE LARGEST CAPITAL MARKETS IN THE WORLDForeign investors can rely on deep capital markets in Canada. As of February 2015, the Toronto Stock Exchange had the greatest number of security listings of any exchange in North America and the second-most listings worldwide. In 2015, the Toronto Stock Exchange and TSX Venture were ranked second in terms of the number of new listings, according to data from the World Federation of Exchanges. Canada is also an important global equity market in specific niches, such as mining and oil and gas, and the TMX Group is a world leader in the number of listed mining, oil and gas, and technology and innovation companies.

SOUND REGULATORY ENVIRONMENTCanada’s financial-services sector is built on a strong foundation of regulatory frameworks that integrate banking, investment and insurance sub-sectors. Canada’s regulator, the Office of the Superintendent of Financial Institutions, meets regularly with the nation’s largest financial institutions to ensure they remain sound and stable, and the whole financial sector is subject to annual review by the Bank of Canada.

EDUCATION, SKILLS AND RESEARCHThe financial-services industry is one of the largest employers in Canada, with a workforce of 721,457 in 2016 and Canadian banks alone employed over 371,000 people8. The country has a world-class system of higher education, with 25 Canadian universities ranking in the top-600 worldwide, and finance programs available at the undergraduate and graduate levels. The 2017 Financial Times’ Global MBA Rankings included three Canadian business schools among the world’s top 100.

CANADA OFFERS EXTREMELY ADVANTAGEOUS COST ENVIRONMENTCanada’s cost environment for professional services is extremely advantageous. According to KPMG Competitive Alternatives 2016, Canada has the lowest cost structure in the G7.

“We are excited with the growth potential of the Canadian market. Our Canadian expansion is the next step in CCG’s objective in providing industry-leading equipment finance and leasing solutions from a regional full-service footprint.”

— Dan McDonough, Co-Founder and Chief Executive Officer, Commercial Credit Group

8 Statistics Canada, CANSIM Table 281-0047, Employment for all employees, 522-Credit intermediation and related activities.

INNOVATIONInnovation is the driving force behind Canada’s prosperity, standard of living and quality of life. R&D spending in higher education as a share of GDP is higher in Canada than in any other G7 country, according to the OECD. Growth in the financial-services industry is driven by technology—a sector in which Canada is a world-leading innovator.

SPECIALIZED RESEARCH CENTRES IN FINANCIAL SERVICES» Capital Markets Institute,

Rotman School of Management (University of Toronto, Ontario)

» Centre of Excellence in Responsible Business, Schulich School of Business (York University, Toronto, Ontario)

» Desmarais Global Finance Research Centre, Desautels Faculty of Management (McGill University, Montréal, Quebec)

» Ben Graham Centre for Value Investing, The Richard Ivey School of Business (University of Western Ontario, London, Ontario)

» KPMG Research Bureau in Financial Reporting, The Phillips, Hager & North Centre for Financial Research, Sauder School of Business (University of British Columbia, Vancouver, B.C.)

» Waterloo Research Institute in Insurance (WatRISQ), Securities and Quantitative Finance (University of Waterloo, Waterloo, Ontario)

» TFSA Centre of Excellence in Financial Services Education, Toronto Financial Services Alliance (Ontario)

Canada offers generous investment tax-credits and funding for financial-services companies.

» IFC Montréal issues certificates that permit companies to receive, for one tax year, a refundable tax credit representing 24 percent of the eligible salary, up to an annual maximum of $16,000 per employee. A foreign-specialist employee can claim, for a period of five years, a deduction in calculating annual taxable income that varies as follows: 100 percent for the first two years, and 75, 50, and 37.5 percent for the following three years.

» Advantage BC’s International Business Activity program enables a corporation to receive up to a 100-percent refund on provincial corporate tax paid on income earned from eligible international business. A registered International financial business specialist can receive a refund of provincial tax on qualifying income at a rate of 100 percent for first two years, then 75, 50 and 25 percent for the next three years.

» Invest Ontario’s Strategic Partnerships Stream (under the Jobs and Prosperity Fund) encourages open-innovation-technology partnerships. The minimum grant amount is $5 million and the maximum grant amount is $25 million. Eligible recipients must match the funding provided in cash and/or in-kind. Funding is allocated on a five-year term, with a potential to renew for a second five-year term.

» Scientific Research and Experimental Development (SR&ED) provides income-tax credits and refunds for expenditures on eligible R&D activity in Canada on wages, materials, some overhead and SR&ED contracts.

» Export Development Canada and Business Development Bank of Canada provide flexible financing programs tailored to support foreign direct investment in Canada.

» The National Research Council of Canada Industrial Research and Assistance Program (NRC-IRAP) provides technical and business advice, as well as funding and other innovation services, to small- and medium-sized enterprises based in Canada.

INNOVATION SUPPORT PROGRAMS

Global Affairs Canada 111 Sussex Drive, Ottawa, Ontario, K1N 1J1, CANADA

Catalogue number: FR5-38/7-2016E-PDF

ISBN 978-0-660-05223-6

Summer 2017

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AN ENABLING BUSINESS ENVIRONMENT

A WELCOMING BUSINESS ENVIRONMENTCanada is the second best place for business in the G20.

Source: Forbes

A HIGHLY EDUCATED AND TALENTED WORKFORCECanada has the most educated talent pool in the OECD with more than half of its population aged 25-64 having a tertiary level education.

Source: OECD

LOW BUSINESS TAX RATESCanada is the most tax competitive country in the G7.

Source: KPMG

WORLD-CLASS CLUSTERS OF INNOVATION, WITH GOVERNMENT AS PARTNERCanada has strong geographic and sectoral clusters, as well as R&D-intensive sectors with the lowest business costs in the G7.

Source: KPMG

FINANCIAL STABILITYCanada’s banking system, ranked 3rd by the World Economic Forum (WEF), remains one of the soundest in the world following eight consecutive first place standings.

Source: World Economic Forum

A GREAT PLACE TO INVEST, WORK AND LIVECanada ranked first among 60 countries for quality of life. Canada is ranked first in the G7 and G20 for overall prosperity of citizens.

Sources: U.S. News and the Legatum Prosperity Index

CANADA HAS A STRONG AND STABLE business climate

that is open for business, investment, and trade. Canada

benefits from a sound, efficient financial system supported by low taxes and business costs

and a government investing in the innovative, clean, inclusive

economy of tomorrow.

Unless otherwise noted, all values in this publication are in Canadian dollars. The content is based on the latest available information at time of publication. Images: Shutterstock. All rights reserved.