[Photo:  by Jeangagnon / Wikimedia Commons]

National Bank of Canada is giving it 5 years to become a “Top 3” Canadian investment bank. The country’s 6th-largest lender with $178 billion of assets said it’s seeking to gain relationships with bigger Canadian companies by leveraging its growing balance sheet and expanding areas of coverage while maintaining ties to medium-sized businesses.

It’s a tall order for a small firm that ranks behind dominant players, such as:

• Royal Bank of Canada (RBC Capital Markets)
• Bank of Montreal (BMO Capital Markets)
• Toronto-Dominion Bank (TD Securities)
• Bank of Nova Scotia (Scotia Capital)
• Canadian Imperial Bank of Commerce (CIBC World Markets)

To go after bigger companies, National Bank will probably have to lend money at more favorable terms than larger competitors, Barclays analyst John Aiken said.

“If you lead with your balance sheet, you get through the door and are able to talk to the CFOs. Then you’re able to demonstrate what you bring to the table and, hopefully, get that next investment-banking mandate."

Yanick Blanchard, head of corporate and investment banking at National Bank Financial, sees a chance to steal market share on Canadian transactions - “Our focus is Canada.” He views Royal Bank of Canada and Bank of Montreal as being more focused on their U.S. investment-banking operations, with Scotiabank more dedicated to Latin America and Toronto-Dominion concentrating on retail banking.

National Bank’s push has shown early success, with 2016 being among its best years for deal-making. The firm advised on 27 acquisitions valued at $12.4 billion, with more than half that amount from three deals. The firm hired about 10 investment bankers in 2016 and plans to add a similar number this year, he said. 

Still, National Bank Financial ranked behind the 5 larger Canadian bank-owned firms advising on takeovers, managing equity financings and corporate bond sales, and on syndicated loans in the country. National Bank’s bright spot is managing Canadian government bond sales, where it ranked #1 four of the last 5 years.