JPMorgan plots expansion into hot Canadian technology banking sector

U.S. financial services giant JPMorgan Chase & Co. is making a play to expand banking services to Canadian technology companies, two years after the collapse of Silicon Valley Bank reordered the domestic sector.

JPMorgan, the world’s most valuable bank by market capitalization, is recruiting for a managing director for Canada for its “innovation economy” unit after making modest inroads in this country in recent years catering to the banking needs of innovation-driven companies.

JPM has five dedicated technology bankers in Toronto, Montreal and Vancouver and has picked up hundreds of clients in Canada, including legal software vendor Clio. The Vancouver-area company uses JP Morgan for cash management services and has a credit facility with the U.S. lender and fellow U.S. bank, Comerica Inc.

According to its job posting, JPM is looking for a Canadian-based leader to hire and oversee a team “responsible for supporting the unique needs” of venture capital firms, founders and high-growth, venture capital-backed companies across eight technology subsectors, including enterprise software, climate technology and life sciences.

Three sources said JPM’s in-house recruiters have blanketed Canadian innovation banking executives with calls in recent weeks to gauge their interest in leading its local practice – and hitting them up for market intelligence on others in the sector.

Andrew Kresse, co-head of JPM’s innovation economy unit, said that after taking the role six months ago, “I saw the innovation economy business in Canada and said ‘We’re doing really well in Canada,’” adding that this country is one of the top 10 innovation markets globally.

“Now that we have critical mass, we want to have a senior leader in Canada who’s responsible for continuing to build the business and serve more clients,” he said. New York-based Mr. Kresse leads the group with John China, a former president with Silicon Valley Bank, who is in the San Francisco area.

JPM has operated in Canada for more than 100 years. Its Morgan Bank of Canada was the first foreign bank established here in 1981 and Chase Manhattan Canada received a charter as a Canadian bank a year later. JPM has 600 employees in Canada in five business lines, including investment banking, commercial banking, payments and asset management.

JPM is entering a crowded space: Canada’s big banks began catering in a more focused way to the particular demands of technology clients in the late 2010s as the sector’s post-credit-crisis renaissance took flight.

Canadian Imperial Bank of Commerce bought technology financier Wellington Financial in 2018 and made it the cornerstone of its innovation banking group. Bank of Montreal and Bank of Nova Scotia followed by launching technology and innovation banking groups in 2019, the same year National Bank of Canada started expanding its long-established practice nationally. Then in 2020, Royal Bank of Canada hired former OMERS Ventures managing partner Sid Paquette to consolidate and expand its technology-focused banking practice under the brand RBCx, establishing Canada’s largest bank as the biggest domestic player in the sector.

The Canadian banks benefited after U.S.-based Silicon Valley Bank, an early specialty technology financier, collapsed two years ago. Several raided SVB’s Canadian ranks, including Toronto-Dominion Bank, which became the last of the Big Five to enter the tech banking space in 2023, while National Bank bought SVB’s Canadian loan portfolio.

Mr. Kresse said the goal of JPM is to “complement the local banks” by pitching itself as the bank of choice for Canadian tech companies as they expand globally, particularly those requiring more lucrative services including advising on mergers and acquisitions, raising large growth and private equity financings or going public. JPM already commands a reputation as one of the world’s top investment banks. It is likely to factor as a leading contender to lead initial public offerings of sizable Canadian private technology companies that choose to list primarily in the United States if the market for new issues continues to warm up.

JPMorgan’s innovation economy unit started in 2016. It has more than 11,000 clients in 40 markets, with 550 employees in 25 countries. The strategy in Canada is to offer a full range of banking services, including deposit-taking (which it can do as a Schedule II bank in Canada, meaning it is a Canadian subsidiary of a foreign bank), cash management, asset management, credit lines and private banking, plus more specialized offerings catering to the sector including offering venture debt. Industry observers expect JPM to focus on the larger, more advanced Canadian companies, but Mr. Kresse said that isn’t necessarily the case.

“For us it’s about simple banking and advising,” said Mr. Kresse. Prospective customers “need advice on how to scale their business. You’ll want to partner with a firm who is used to working with the top 1,000 investors in the world. You may come to JPMorgan if you are thinking of expanding globally.”

He said the goal is to fill the role by early next year with “someone who has been in the ecosystem and knows both the investors as well as the companies. It’s important for us to have a leader who is local in this space.”

He said the plan is to double JPM’s business and employee count, adding: “We’ll grow as needed to support our clients and prospective clients. If we see more demand we’ll continue to grow.”