Toronto Star, Rita Trichur, 28 August 2009
It doesn't take long to figure out what makes Bill Downe tick.
Minutes into a talk with him, the Bank of Montreal's president and chief executive officer pitches me on switching my mortgage to his bank. He tells his public relations chief to make a note of my renewal date. Midway through a talk with him, he brings it up again.
"In fact, I'm hoping after we've converted your mortgage, when you are standing on the soccer field and your little guy is playing, you might ask the person next to you: `Say, where do you bank? Are you happy?'" Downe said, sporting a rascally grin.
Downe takes a personal interest in customer relations and credits that type of old-fashioned service for turning around a bank that only two years ago was considered a laggard.
This is a story about how Canada's oldest bank got its groove back and the man who made it happen. After two tumultuous years, BMO is regaining its self-confidence. And at age 192, it finally knows what it wants to be when it grows up – a traditional bank.
Enter Downe, a man who shatters the stereotype of the stodgy Bay Street banker. For an interview this week, the 57-year-old makes himself at home in a cubicle in the branch at First Canadian Place. When a passing customer recognizes him, he quips that he's in his new office.
Reflecting on the past two years, he concedes BMO had its "fair share" of challenges. His saving grace was never promising shareholders a silver bullet. Instead, he devised a long-term plan to get back on track.
"Coming through a period like the one that we've just come through gives you an opportunity to not only test yourself but test your colleagues," he said. "And I think we've been extraordinarily successful in a demanding environment."
The accolades didn't always flow.
Rewind to early 2007, when BMO was still reeling from two botched merger attempts – one with Royal Bank of Canada in 1998 and the other with Bank of Nova Scotia in 2002. Some say it took too long for BMO's top management team to let go of the possibility of a big merger.
In the meantime, its mainstay personal and commercial business suffered from neglect. And while outgoing CEO Tony Comper began the overhaul, Downe was left to do the heavy lifting.
Problem is, from the day he took the reins in March 2007, Downe was doing damage control. His inauspicious start was marked by the bank's first earnings decline in six quarters.
By April, Downe was busy putting out a new fire after disclosing commodity-trading losses involving U.S. brokerage Optionable Inc. The scandal cost BMO $853 million.
The global credit crunch hit that summer. Suddenly, BMO's profitability was being tripped up by a slew of debt-related writedowns of $2.84 billion since 2007. BMO missed most of its annual targets for 2007 and 2008. As the economy soured, its stock price nose-dived, hitting a low of $24.05 in February 2009. That's a far cry from April 18, 2007, when it reached $72.75.
Earlier this year, its dividend yield topped 10 per cent, fuelling speculation of a potential cut.
With their shareholdings in the toilet, some investors chastised the bank in March for awarding Downe a 9 per cent raise, increasing his compensation to about $6.38 million in a year when BMO's profits fell by more than 7 per cent. About a week after announcing his pay packet, Downe voluntarily gave up some $4.1 million. Other bank CEOs made similar gestures amid the tough economic climate.
For much of that time, it seemed as if BMO's old French moniker of "Baie Maux," or "Bay of Pains," was starting to ring true again. Nonetheless, industry rivals credit Downe for maintaining a steady hand throughout the turmoil.
"I think Bill, to his credit, has just sort of put his head down and worked his way through issues," said Gordon Nixon, chief executive of Royal Bank.
Fast-forward to the present and even hardened BMO naysayers are applauding. Not only did its third-quarter profit climb nearly 7 per cent from last year, it set aside less money to cover bad loans.
During its May-to-July quarter, BMO's domestic retail bank recorded a 15 per cent increase in loans compared with the same period last year. It gained market share in both personal deposits and commercial banking.
It did so partly by staying focused on its customers during the recession, including a concerted effort to teach them how to save money and pay down debt. And as its rivals tightened credit for commercial clients, BMO signalled that it was open for business. It beefed up on commercial bankers and designated dedicated commercial districts in Toronto, Montreal and Vancouver.
"We tip our hats to BMO's management team, which has done an excellent job of generating much stronger (and higher quality) earnings than we had anticipated," John Aiken of Dundee Capital Markets wrote in a note to clients.
Ask Downe about his business strategy going forward and he circles back to good customer service. That includes warm welcomes and sincere "thank yous" – even from the top dog himself. Downe is known for calling irate customers and promoting BMO to complete strangers on the street.
"I came down Bay Street in a taxi last Wednesday and the cab driver dropped me off right here," he said. "And I asked him where he banked and he told me. And I asked him what it would take for us to have the opportunity to be his banker. And I tell ya what, he warmed right up and said he would think about it."
Two weeks before that, he gave the hard sell to a Chicago cab driver who was thinking about getting a mortgage with its Harris Bank. He didn't tell either about his position with the bank.
"There isn't anyone that I wouldn't approach. If the president of the bank across the street (Rick Waugh) came along, I'd ask him if we could have his business, too," he said gesturing at the Bank of Nova Scotia.
That's no put-on, say those who know him.
"I'd be surprised if he didn't ask you for business," remarked Bob Bissett, senior vice-president of commercial banking for the Greater Toronto Area.
While he likes to portray himself as a customer advocate, Downe has been accused of having a tin ear on one issue this past year. In March, the bank hiked interest rates on personal lines of credit by one percentage point at a time when the Bank of Canada was cutting interest rates.
BMO blamed the rate hike on "changing market realities" and increases in the cost of raising funds. Funding costs, however, have come down from crisis levels and customers are still smarting over the move.
That beef aside, Finance Minister Jim Flaherty says Canadians ought to take pride in Downe's contributions throughout the financial crisis. In particular, he notes Downe's vast knowledge of the U.S. banking system, acquired during postings with U.S.-based Security Pacific Bank and BMO in Los Angeles, Houston, Denver and Chicago.
"That's been quite helpful in terms of our discussions concerning what was happening in the United States during the height of the credit crisis and what actions we should take in Canada."
Still, Downe is not about to sit on his laurels. While he's optimistic about the outlook, he maintains an air of caution. "You have to remember that in the rear-view mirror, two years looks like just a moment," he said. "Going ahead 90 days seems like a very long time."
;
It doesn't take long to figure out what makes Bill Downe tick.
Minutes into a talk with him, the Bank of Montreal's president and chief executive officer pitches me on switching my mortgage to his bank. He tells his public relations chief to make a note of my renewal date. Midway through a talk with him, he brings it up again.
"In fact, I'm hoping after we've converted your mortgage, when you are standing on the soccer field and your little guy is playing, you might ask the person next to you: `Say, where do you bank? Are you happy?'" Downe said, sporting a rascally grin.
Downe takes a personal interest in customer relations and credits that type of old-fashioned service for turning around a bank that only two years ago was considered a laggard.
This is a story about how Canada's oldest bank got its groove back and the man who made it happen. After two tumultuous years, BMO is regaining its self-confidence. And at age 192, it finally knows what it wants to be when it grows up – a traditional bank.
Enter Downe, a man who shatters the stereotype of the stodgy Bay Street banker. For an interview this week, the 57-year-old makes himself at home in a cubicle in the branch at First Canadian Place. When a passing customer recognizes him, he quips that he's in his new office.
Reflecting on the past two years, he concedes BMO had its "fair share" of challenges. His saving grace was never promising shareholders a silver bullet. Instead, he devised a long-term plan to get back on track.
"Coming through a period like the one that we've just come through gives you an opportunity to not only test yourself but test your colleagues," he said. "And I think we've been extraordinarily successful in a demanding environment."
The accolades didn't always flow.
Rewind to early 2007, when BMO was still reeling from two botched merger attempts – one with Royal Bank of Canada in 1998 and the other with Bank of Nova Scotia in 2002. Some say it took too long for BMO's top management team to let go of the possibility of a big merger.
In the meantime, its mainstay personal and commercial business suffered from neglect. And while outgoing CEO Tony Comper began the overhaul, Downe was left to do the heavy lifting.
Problem is, from the day he took the reins in March 2007, Downe was doing damage control. His inauspicious start was marked by the bank's first earnings decline in six quarters.
By April, Downe was busy putting out a new fire after disclosing commodity-trading losses involving U.S. brokerage Optionable Inc. The scandal cost BMO $853 million.
The global credit crunch hit that summer. Suddenly, BMO's profitability was being tripped up by a slew of debt-related writedowns of $2.84 billion since 2007. BMO missed most of its annual targets for 2007 and 2008. As the economy soured, its stock price nose-dived, hitting a low of $24.05 in February 2009. That's a far cry from April 18, 2007, when it reached $72.75.
Earlier this year, its dividend yield topped 10 per cent, fuelling speculation of a potential cut.
With their shareholdings in the toilet, some investors chastised the bank in March for awarding Downe a 9 per cent raise, increasing his compensation to about $6.38 million in a year when BMO's profits fell by more than 7 per cent. About a week after announcing his pay packet, Downe voluntarily gave up some $4.1 million. Other bank CEOs made similar gestures amid the tough economic climate.
For much of that time, it seemed as if BMO's old French moniker of "Baie Maux," or "Bay of Pains," was starting to ring true again. Nonetheless, industry rivals credit Downe for maintaining a steady hand throughout the turmoil.
"I think Bill, to his credit, has just sort of put his head down and worked his way through issues," said Gordon Nixon, chief executive of Royal Bank.
Fast-forward to the present and even hardened BMO naysayers are applauding. Not only did its third-quarter profit climb nearly 7 per cent from last year, it set aside less money to cover bad loans.
During its May-to-July quarter, BMO's domestic retail bank recorded a 15 per cent increase in loans compared with the same period last year. It gained market share in both personal deposits and commercial banking.
It did so partly by staying focused on its customers during the recession, including a concerted effort to teach them how to save money and pay down debt. And as its rivals tightened credit for commercial clients, BMO signalled that it was open for business. It beefed up on commercial bankers and designated dedicated commercial districts in Toronto, Montreal and Vancouver.
"We tip our hats to BMO's management team, which has done an excellent job of generating much stronger (and higher quality) earnings than we had anticipated," John Aiken of Dundee Capital Markets wrote in a note to clients.
Ask Downe about his business strategy going forward and he circles back to good customer service. That includes warm welcomes and sincere "thank yous" – even from the top dog himself. Downe is known for calling irate customers and promoting BMO to complete strangers on the street.
"I came down Bay Street in a taxi last Wednesday and the cab driver dropped me off right here," he said. "And I asked him where he banked and he told me. And I asked him what it would take for us to have the opportunity to be his banker. And I tell ya what, he warmed right up and said he would think about it."
Two weeks before that, he gave the hard sell to a Chicago cab driver who was thinking about getting a mortgage with its Harris Bank. He didn't tell either about his position with the bank.
"There isn't anyone that I wouldn't approach. If the president of the bank across the street (Rick Waugh) came along, I'd ask him if we could have his business, too," he said gesturing at the Bank of Nova Scotia.
That's no put-on, say those who know him.
"I'd be surprised if he didn't ask you for business," remarked Bob Bissett, senior vice-president of commercial banking for the Greater Toronto Area.
While he likes to portray himself as a customer advocate, Downe has been accused of having a tin ear on one issue this past year. In March, the bank hiked interest rates on personal lines of credit by one percentage point at a time when the Bank of Canada was cutting interest rates.
BMO blamed the rate hike on "changing market realities" and increases in the cost of raising funds. Funding costs, however, have come down from crisis levels and customers are still smarting over the move.
That beef aside, Finance Minister Jim Flaherty says Canadians ought to take pride in Downe's contributions throughout the financial crisis. In particular, he notes Downe's vast knowledge of the U.S. banking system, acquired during postings with U.S.-based Security Pacific Bank and BMO in Los Angeles, Houston, Denver and Chicago.
"That's been quite helpful in terms of our discussions concerning what was happening in the United States during the height of the credit crisis and what actions we should take in Canada."
Still, Downe is not about to sit on his laurels. While he's optimistic about the outlook, he maintains an air of caution. "You have to remember that in the rear-view mirror, two years looks like just a moment," he said. "Going ahead 90 days seems like a very long time."
