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The Opportune Times
November 2009 / Edition #4

As many of our clients and candidates continue to assess the impact of the recession on their organizations and career aspirations, we at Thorek/Scott and Partners are looking beyond the horizon to Canada's evolving financial landscape. Continuing our series in The Opportune Times, we now look at the state of talent in the area of Emerging Banks.

Bank Building: Redefining Financial Institutions

Our daily interactions with the country's financial talent give us a frontline view of the shifting market. In our estimate, the most positive recent development is the surge in applications for new bank licenses. Over the past two years, numerous Canadian non-bank financial institutions and foreign financial institutions have begun transforming themselves into banks. Obtaining a Canadian banking license allows financial institutions to expand their product offerings and grow their interactions with borrowers and depositors. Expanding their sources of capital surely provides financial institutions a secure advantage in unstable climates like this one. However, bank building is a formidable challenge. Our clients have had to reinforce foundations, redefine strategies, and aggressively reevaluate talent.

To be successful, these new banks require skilled and innovative leaders. This is a situation Thorek/Scott and Partners has faced, having facilitated the entry of new banks into the Canadian market before. When Thorek/Scott started out in executive search, in the early 1980's, we built our business by placing experienced professionals into the Schedule II banks that shook up the staid Canadian financial landscape. Many of our candidates who chose to join them were unwilling to wait years for career growth in the major banks. Today, those same candidates are top executives in the country's best known financial institutions. They tell us that the experience they received during their tenures with Schedule II banks was integral to their success.

As less traditional financial institutions now transition into banks, talented individuals with best practice experience and leadership potential are once again in demand. In expanding their platforms, new banks require expertise in a host of areas including: finance, accounting, risk and operations. Those who choose to join these emerging banks will have their skills tested, but will be poised to become significant players in the financial markets of the future. The work will be innovative, fast paced, and highly influential. However, the founding and development stages will impart the skills and experiences tailor made for leadership roles later on.

It's a rare challenge to uncover professionals with the skills to become Chief Financial Officers, Chief Risk Officers, Vice Presidents of Capital Markets, Treasurers, Chief Operating Officers and Presidents for new banks. We at Thorek/Scott are privileged to once again shape a new era in Canadian banking. Although the economy remains unpredictable, we believe that with the right individuals at the helm, these new institutions will pave the way to a more secure and stable Canadian economy in the future.

Ask the expert
Michael Thorek - President of Thorek/Scott and Partners
checkmark Ask The Expert

1. How does the current trend of the emergence of new banks differ from when schedule II banks came into the market?

When foreign banks entered the Canadian marketplace in the 80's and early 90's, they created an immense time of change. Canadian law dictates that to operate domestically, foreign players had to incorporate in Canada and create a parallel operational hierarchy based in this country. In essence, these Schedule II Banks acted as corporate banking outposts for the most part. Their thrust was not personal products or mortgages but corporate loans geared toward commercial and institutional players. In that light, what is happening now with the emergence of new banks in this country is an entirely different situation - especially in terms of scale. Unlike the Schedule II's that came before them, the current crop of emerging banks (like Resmor and Macquarie) are focused on utilizing their existing platforms to move forward into new retail and wealth management areas. Centered on retail products and personal lending, these organizations are keen to replicate entire banking hierarchies and are committed to long term capital outlays.

2. What challenges will these organizations face from a talent perspective?

As these new banks grow and come under more scrutiny from regulatory agencies, the need for top tier talent will be great. Specifically, as these banks push into new areas, they will need to reevaluate their existing pool of talent and upgrade the sophistication of that talent when necessary. Builders, not maintainers, will be prized in this environment. These organizations require professionals who know how to operate organizations to run as banks in all respects - from underwriting and risk to accounting and finance to marketing and sales. Moreover, expertise in working in an OSFI regulated environment is important. These are Canadian banks and as such will have Canadian leadership and Canadian compliance standards. Securing the talent they need is going to be a large undertaking for these institutions. We have found that this has some impact on the compensation for roles with these new players. Employers are willing to pay more for talent as they understand that professionals who are the best in their field will be taking a risk in leaving bigger, more established organizations to join new emerging players.

3. What specific kind of experiences will aid these organizations?

Regardless of any foreign affiliations these new banks may have, Canadian regulators want separate boards and separate bank controls that are established in this country. Regulators want boots on the ground. Parachuting in senior leaders from international locales could prove problematic. Therefore, these organizations need individuals who have confidence saying "I know and understand the Canadian market". These professionals will use this insight to help decide what products will work in this market and which won't. Specifically, these banks will be looking for talent with similar skill sets utilized by the larger financial institutions.

4. Why would someone leave one of the major banks to join an emerging bank?

To be frank, it will not always be for the dollars. Those interested in working for these institutions will be drawn by the idea of building and leaving an indelible mark. Joining an emerging bank will also allow those who wish to make a direct impact immediately, bypass the hierarchies that weigh down larger organizations. You will not have to wait 15 years to be in a significant decision making position. For many, that prospect is an exciting means to increase their learning, implement their ideas and join a team of entrepreneurial financial players.