BMO CEO sees early stages of investment outflow from Canada to the U.S.

Armina Ligaya, The Canadian Press</span>
Published Thursday, April 5, 2018 12:40PM EDT

TORONTO -- The Bank of Montreal's chief executive says the it is seeing investment outflow from Canada to the U.S. in the wake of tax reforms and other factors south of the border.

Darryl White told reporters after its annual meeting of shareholders that this pattern is not "profound" at this stage.

"In real time, we are seeing the early stages of a decision that's being made to invest, at the margin, in the United States before Canada with some of our customers," he said Thursday.

This departure of capital is due to several factors, including U.S. President Donald Trump's recent tax reforms, he said.

White's comments after its annual meeting of shareholders come as Ottawa finds itself under increased pressure to respond to Trump's sweeping tax changes which, among other things, cut the U.S. corporate tax rate from 35 per cent to 21 per cent at the beginning of the year.

Royal Bank's chief executive Dave McKay recently said a "significant" investment exodus to the U.S. was underway, particularly in the energy and clean-technology sectors.

McKay said capital was already leaving the country "in real time" and urged the federal government to stem the flow.

White also commented on the ongoing North American Free Trade Agreement negotiations.

He told shareholders in his opening address that BMO is "confident" that the "balanced and successful trading relationship" will be reflected in a "positive conclusion."

BMO's U.S. business represents more than 25 per cent of its total profits, which continue to grow faster than the rest of the bank, White said.

It contributed $1.43 billion to the bottom line in 2017, and the total U.S. segment has delivered compound annual income growth of 12 per cent over the past two years.

Let's block ads! (Why?)