It’s said money makes the world go round - but it’s actually the financial services sector that keeps the wheels of business well lubricated and the economy moving.
That is particularly true in Calgary where the oil and gas industry provided the foundation for a financial services sector that has fundamentally transformed in the last 15 years. As the funding for mega-energy projects became larger increasingly complex, the city emerged as a global financial centre.
The large number of head offices in Calgary has also facilitated the demand for corporate banking and professional services.
Calgary is widely recognized as a global energy capital with Canada a top five producer of crude oil and natural gas producer worldwide. It’s less well known the city actually plays a larger role in global energy finance than energy production.
The strengths of the cluster of financial services firms in Calgary are in investment banking, managing foreign direct investment, private equity management, wealth management, and retail and corporate banking.
A study by the Conference Board of Canada released in June found investment bankers in Calgary “end up consulting on some of the largest (merger and acquisition) deals in Canada” each year. It confirmed how capital-intensive industries, like energy, create demand for financial services.
Calgary firms were involved in 11.7 per cent of all M&A activity in Canada – largely driven by the energy sector.
“Over the last five years (2012-2016) the city’s firms handled 9.5 per cent of energy-related deals across the world, and about 17 per cent of their total value,” said the report titled An Assessment of Calgary as a Financial Centre released in June. “This is about four times higher than Alberta’s share of global energy production.”
Virtually every major investment bank and a high share of the leading commercial banks in the world have a presence in Calgary.
The Conference Board report noted Calgary accounts for an “outsized share” of global activity in the sector and the expertise from “a critical mass of talent and firms in the city” is exported all over the world.
The main reason is our people.
Canada has one of the most respected financial systems in the world and the labour force productivity –in an industry where labour is the dominant cost – the financial services sector in Calgary is 25 per cent higher than the country’s other three global banking centres.
“Firms in Calgary are accustomed to dealing with the hardships that a downsizing in the economy can bring and it has made them more resilient,” the report noted. “This resilience, and high levels of output per worker, are indicative of a highly skilled and motivated workforce that drive substantial value for the firms that employ them.”
Add in a low-tax environment, strong global transportation links and prime commercial real estate that is affordable and available and the Conference Board acknowledged “Calgary is an attractive place for financial services firms to locate their operations.”
It shouldn’t come as a surprise. As the innovation ecosystem in Calgary works to develop clean-tech solutions to global energy challenges, there needs to be an equally skilled and ambitious financial services sector to ensure those bright ideas become reality.