BMO digs deep in mining in ‘transition’ year for bank

Bloomberg

BMO Capital Markets’ metals and mining division faced upheaval this year after losing its two veteran co-heads during an already tough time for the resource industry. Its new leaders aim to prove the investment bank remains as strong as ever in the sector.
The Bank of Montreal unit is accelerating lending and adding more bankers, including a sales-and-trading team poa-ched from Bank of Nova Scotia, to continue competing in the beleaguered resource sector, according to Ilan Bahar and Jamie Rogers, the new co-heads of global metals and mining at BMO Capital Markets.
“It was a year of transition,” Bahar said in an interview. “We’ve had a great year throughout this transition year and we found ways to invest.”
Bahar and Rogers expanded the business after succeeding Egizio Bianchini and Jason Neal, who left early in the year. Rivals were unable to to capitalise on the shakeup, even amid weakness in the market, Rogers said.
“It was hopeful noise coming from many of our competitors that they could expose that flank on us,” Rogers said. “We’ve proven them wrong this year and expect to continue to prove them wrong next year.”

PRICES HURT
An economic slowdown in China, the world’s biggest commodity consumer, along with trade tensions and a strong US dollar drove down prices of industrial metals this year, while gold also was hurt by the dollar’s gain. Still, prospects are strong for most metals as supplies shrink and mining investments stagnate. Deals are still getting done, allowing investment banks to collect fees for advising on takeovers and arranging financing.
BMO Capital Markets has more than 100 people involved in metals and mining, the most among Canada’s bank-owned firms, and the addition of three corporate bankers since 2017 helped increase lending to companies in the industry to more than C$10 billion ($7.5 billion).
“Our lending commitments to the metals and mining sector at BMO have doubled over the last five years, and a lot of that has really been in the last couple years,” Bahar said.
BMO also advised on more mining deals than any other investment bank this year, with the firm involved in 19 announced acquisitions, including guiding Nevsun Resources Ltd. on its proposed $1.41 billion takeover by Zijin Mining Group Co.
The investment bank’s average deal size and total value of transactions were smaller, however, than firms such as Canadian Imperial Bank of Commerce and Morgan Stanley.