Investment Banking: Vancouver Edition

If you work in finance in Canada, do you have to be in Toronto?

It’s like asking whether you need to be in New York in the U.S.: No, but you’ll probably have to go there at some point, especially if you want to reach the top ranks.

But there are advantages to regional offices.

We’ve previously covered Calgary, and my long-term goal is to feature every city in Canada – so Vancouver seemed like the next logical choice.

I recently caught up with a reader who has IB experience in both Vancouver and Toronto, and I picked his brain about the trade-offs of both places:

Vancouver vs. Toronto

Q: I’ve already written a lot about banking in Canada, so let’s start with your story.

A: I grew up in a small town in British Columbia and came to Vancouver for university.

I started doing an arts degree with a focus on economics, but I quickly made the switch to business school to pursue finance.

But I wasn’t committed to investment banking initially; I didn’t even know all the options since my family had no business background.

In my final few years, I started networking with alumni, friends of friends, and cold contacts in different fields, which made me lean toward investment banking.

I was interested in IB because I enjoyed my corporate finance classes the most, I wanted the exit opportunities, and I felt my personality was a good fit for the industry.

I did several internships, including one in private equity and one at a Big 4 firm, and went through the recruiting process here to win a full-time investment banking offer.

Since then, I’ve worked in both Toronto and Vancouver, so I have a good idea of what to expect in each place.

Q: On that note, then… how is investment banking different in Vancouver?

A: Investment banking is smaller and more industry-specific; if you told someone here that you work at a bank, the person would probably ask, “Which branch?”

Toronto has the Big 5 Canadian banks, the bulge bracket firms, the elite boutiques, the regional boutiques, and others, but Vancouver is limited to the Big 5 and a few other firms such as Macquarie, National Bank, and Canaccord.

A few boutique investment banks here include Fort Capital, Agentis Capital, and Capital West.

Just like oil & gas is the main industry in Calgary, mining is the dominant industry here since many big mining companies, such as Goldcorp and Teck, are headquartered in the area.

Almost every bank here has a Metals & Mining coverage group and a “Diversified” industry group for Forestry, Consumer Retail, Tech and Telecom, and a few others.

Analysts may or may not be shared between the groups, depending on the office.

By contrast, Toronto has a more traditional setup with different coverage groups for the main industries: FIG, Real Estate, Mining, Oil & Gas, Power & Utilities, Consumer Retail, and so on.

Deal execution work is not “outsourced” to Toronto: Similar to how teams in Calgary do oil & gas deal execution in-house, the same thing happens here with mining deals.

The deal types (M&A and debt/equity financings) are the same in both cities, but you’ll get more consistent deal flow in Toronto.

But you’ll also be further removed from deals, and you won’t get as much client interaction since the teams are bigger.

In Vancouver, most offices only have about 10-15 people across all levels, so even as a First-Year Analyst, you’ll play a somewhat larger role in most deals.

Q: Thanks for that summary.

What about recruiting or interview differences between the two regions?

A: The recruiting process and interviews are similar.

It helps to know a bit about metals & mining, but they’re not going to ask you 100% mining technical questions for the entire interview just because it’s Vancouver.

The main differences are:

• Targeted Schools – In both cities, you should be at one of the main target universities in Canada (Ivey, Rotman, Queens, Schulich, and McGill) to have a decent chance.

However, in Vancouver, it is more plausible to get into investment banking from the two top-ranked local universities: The University of British Columbia (UBC) and Simon Fraser University (SFU).

It’s still extremely difficult because only a few students per year win IB offers, but programs like the Portfolio Management Foundation (PMF) Program at UBC do give you an advantage.

• Local Ties – Regional teams spend more time asking why you want to live and work in their city, and they usually want you to have ties to the city, such as family or friends there. Otherwise, they might assume that you’re not going to stick around.

It’s the same challenge that comes up in places like Houston.

Q: OK, thanks for outlining that.

Previous interviewees from Canada have said that IB recruiting is very competitive because the industry is so small.

Can you do anything to stand out?

A: Your only real option as an undergraduate or recent graduate is networking.

Just as in the U.S., banks have been recruiting earlier and earlier for both summer and full-time roles, and many firms now run accelerated processes at target schools.

When our firm recruits, we’ll rarely select someone for a first-round interview unless we’ve already met the candidate.

The fact that the industry is small can also help your case because you’ll get to know everyone quickly, and everyone will be aware that you’re looking for a job.

Moving Up the Ladder and Jumping to the Buy-Side

Q: I had to ask, but yeah, that’s pretty much what I expected to hear…

What are the advancement opportunities there like?

A: It’s possible to move up the ladder in Vancouver, but it will become more difficult as you become more senior because the teams are so small.

A higher percentage of Analysts become Associates in Vancouver than in Toronto simply because there aren’t as many exit opportunities.

If you want to stay in investment banking for the long term, I would strongly recommend spending time in a major financial center such as Toronto, New York, or London, because it’s always easier to move from a major center to a regional office than to do the reverse.

Q: I see. You mentioned that there aren’t as many exit opportunities – what do you see in terms of private equity, hedge funds, and pension funds?

A: There are some middle-market PE firms here, but there are far more of them in Toronto.

On the private equity side, some firms with offices in Vancouver include CAI, Parallel49, Tricor Founders, Fulcrum, Yellow Point, Regimen, Lighthouse, Headwater, and First West.

Many of these firms invest in lower-middle-market businesses – EBITDA between $5 and $15 million, for example.

They may pursue traditional leveraged buyouts, but much of the strategy and value creation will come through heavy involvement with portfolio companies to “modernize” and grow the businesses.

Regarding hedge funds and asset management, a few firms with offices here include Leith Wheeler, Connor, Clark & Lunn (CC&L), PH&N, Vertex One, Odlum Brown, Mackenzie Investments, Fulcra, and Deans Knight. Almost all of these are on the “asset management” side.

The main pension fund is British Columbia Investment Management Corporation (bcIMC), which is located outside the city in Victoria, on Vancouver Island.

Q: Great. So, bottom line, do you prefer Toronto or Vancouver?

A: Toronto offers more consistent work and better exit opportunities.

I worked fewer hours in Toronto as well, but that one is highly variable and might be specific to my situation.

The teams are so small in Vancouver that there’s a huge variance in work/life balance between different firms and groups.

People sometimes claim that the culture is “more laid-back,” but that is misleading: Certain firms in Vancouver are known for grinding their Analysts non-stop (I won’t mention any names).

Compensation is the same in both places, so that’s not a factor.

Vancouver is better if you want to be a mining specialist or if you have friends/family there and you want to stay in the area for the long term.

Otherwise, Toronto wins because of the industry diversity, deal flow, and exit opportunities.

Q: Thanks for that summary.

What are you planning to do in the future?

A: Just like every other banker, I want to move into private equity.

I’m more interested in middle-market funds rather than the mega-funds because I don’t want Banking 2.0 with crazy hours all over again.

Also, I want to gain more operational experience, and smaller firms are better for that.

I’m not sure if I’ll end up in Toronto, Vancouver, or somewhere else, so I’ll have to get back to you on that one…

Q: Great. Thanks for your time!

A: My pleasure.