Vancouver is rapidly climbing the ranks of the world’s financial centres – from 33rd on the Global Financial Centre Index in 2008 to 20th in 2016.
Key strengths in Vancouver include:
- Wealth management;
- Facilitating foreign direct investment;
- Trade finance and settlement;
- Retail and corporate banking;
- Investment banking;
- Mortgage brokers;
- Venture capital.
* The report, Stronger Together: The Strengths of Canada’s Four Global Financial Centres, was co-funded by AdvantageBC, Calgary Economic Development, Toronto Financial Services Alliance and Finance Montreal. The four organizations are working together to build Canada’s reputation as a leader in global financial services.
Vancouver’s Reputation as an International Financial Centre
British Columbia is one of two designated financial centres in Canada, and even through the recent global economic downturn; British Columbia maintained its triple-A credit rating.
This performance is due to many factors:
- the relatively strong Canadian economy,
- the global reputation of the province as a gateway for trade,
- increasingly competitive tax policies.
The Global Financial Centres Index (GFCI), produced by the Z/Yen Group of London, United Kingdom, aims to examine the major financial centres globally in terms of competitiveness. The GFCI is published every six months and Vancouver has been rapidly climbing the global ranking. Vancouver is deemed an “established transnational” centre with a particular strength in wealth management.
Four Canadian cities – Toronto (#13), Vancouver (#20), Montreal (#15) and Calgary (#34) are ranked among the top of the 2016 GFCI Index, demonstrating Canada’s distinction of having the world’s soundest banking system. Each of them brings to the table different relative strengths that, when combined, portrays Canada as a major financial services powerhouse that is well positioned to take on an even bigger role going forward. With Canada designated as the RMB settlement hub for North America, we have a unique opportunity to grow Vancouver’s financial sector.
Z/Yen’s Global Financial Centres Index (GFCI), is a bi-annual ranking of the competitiveness of financial centres based on over 29,000 financial centre assessments from an online questionnaire together with over 100 indices from organisations such as the World Bank, the Organisation for Economic Co-operation and Development (OECD) and the Economist Intelligence Unit.
Financial Services Companies
BC financial services companies are developing expertise in commodities and global transaction banking, leveraging Vancouver’s position as a global financial player.
- All five of Canada’s largest banks have significant operations in British Columbia. (“Big Five” is the name used for the five largest banks that dominate the industry in Canada). They are:
- Other banks with substantial operations in Canada include:
- Vancity, Canada’s largest credit union, is listed in The Banker’s Top 1000 World Banks. The five largest credit unions in British Columbia are:
- HSBC, Agricultural Bank of China, State Bank of India (Canada) and Mizuho Financial Group have their Canadian headquarters in British Columbia.
- The Bank of China recognized the value of doing business in BC as it announced the consolidation of its Canadian trade finance services at its International Business Centre in Vancouver; noting BC’s tax competitiveness as being key to this decision.
- The credit union system in the city is the most significant contributor to the growth in Vancouver’s financial services sector over the past five years, after the rise of Asia as an economic power and Canada becoming a settlement hub for the Renminbi.
- As the home for the TSX Venture Exchange, Vancouver has a long established history of supporting equity financing for small cap businesses, particularly in the mining sector.
Vancouver is among the top-10 wealth management centres in the world. In 2014, the Industrial and Commercial Bank of China (ICBC) opened its wealth management headquarters in Vancouver, BC.
- Vancouver’s position as a destination for wealthy Asian immigrants has helped to cement the importance of full-service wealth management firms in the region.
- Vancouver also accounts for an above-average share of fund management activity. The city is known as a bond trading center, and is a hot bed of activity in the alternative investment space like hedge funds.
- Facilitating foreign direct investment is also a core strength for Vancouver and the second highest rated activity by survey respondents for the city after wealth management.
Source: Conference Board of Canada report, Stronger Together: The Strengths of Canada’s Four Global Financial Centres
Schedule III Banks
In June 2014, the BC province announced an expansion of the IBA program to allow Schedule III Banks (branches of foreign banks) to benefit as domestic and foreign subsidiaries already do, providing these financial institutions with the certainty they need to make their North American location decisions. The Agricultural Bank of China (ABC) selected Vancouver as their Canadian headquarters in 2012, even before the change had been made.
Foreign-owned subsidiaries or branches of foreign banks are prevalent in Vancouver, reinforcing Vancouver’s reputation as an internationally recognized financial centre. Many of these foreign subsidiaries specialize in corporate banking.
In November 2013, BC became the first foreign government to issue a so-called “Dim Sum” Bond, raising RMB 2.5 Billion (CDN 425m). One year later, in November 2014 BC issued a second “Dim Sum” Bond, raising RMB 3 Billion (CDN $550m). HSBC acted as lead manager and the Bank of China and ICBC acted as co-managers. Both bonds were oversubscribed.
- The Office of the Superintendent of Financial Institutions Canada (OSFI) is the primary regulator and supervisor of federally regulated deposit-taking institutions, insurance companies, and federally regulated private pension plans. More about OFSI.
- The Bank of Canada is the nation’s central bank. It is not a commercial bank and do not offer banking services to the public. Rather, it is responsible for Canada’s monetary policy, bank notes, financial system, and funds management. It’s principal role, as defined in the Bank of Canada Act, is “to promote the economic and financial welfare of Canada.”
- The Canadian Bankers Association (CBA) works on behalf of 54 domestic banks, foreign bank subsidiaries and foreign bank branches operating in Canada and their 274,000 employees. It provides governments and others with a centralized contact to all banks on matters relating to banking in Canada. The CBA advocates for effective public policies that contribute to a sound, successful banking system that benefits Canadians and Canada’s economy. Most community centres publish calendars with a list of all their facilities, programs, fees and schedules.