By James Langton

(January 25 – 18:00 ET) – Merrill Lynch analyst Jamie Keating observes a vast divergence in strategies coming out of Merrill’s Canadian Banks’ CEO Conference yesterday.

In summing up the festivities, Keating says, “It was clear that each bank CEO has realistic designs on growth outside Canada in chosen niches — also sensed a collectively sharpened business line focus in acquisition/ disposition programs and disciplined capital allocation. At the same, the increasing divergence in strategic initiatives was striking.”

The CEOs appeared to be comfortable with their credit position, Keating says. “Overall, the group appears confident about preparedness for this credit cycle, citing a variety of ‘it’s different this time’ possibilities, including earlier and more aggressive use of Chapter 11 protection, effectively preserving higher liquidation/restructuring values and lower write-offs.”

He notes that the banks seem to be abandoning earnings growth as the key measure for 2001, replacing it by return on equity.

Merrill Lynch sees TD CEO Charlie Baillie’s vision for “scale” in technology as a signal that the bank has an appetite for more growth through acquisition or joint ventures.

It noted Bank of Montreal’s insistence that Nesbitt Burns and Harris Bank are not for sale, and that it may be looking for niche U.S. acquisitions like last year’s purchase of discounter Freeman Welwood.

It also heard National Bank’s CEO Andre Berard pitching the bank as gatekeeper to Quebec. “While he cautioned political shifts in Quebec were not as friendly to mergers, it was clear that the ‘partner’ subject is central to the bank’s near-term plans.”