The Big Five banks’ CEO cycle is complete. Here’s how they performed

BMO boss Bill Downe will be the last of the financial crisis-era top bosses to depart when he steps down in October. How did he stack up against his peers?



And then there were none. Earlier this month, Bank of Montreal (BMO) top boss Bill Downe announced he would be stepping down at the end of October. His departure will mark the end of a CEO cycle for Canada’s Big Five banks.

Downe (March 2007–October 2017) was preceded out of the corner office by TD Bank’s Ed Clark (December 2002–October 2014), Canadian Imperial Bank of Commerce (CIBC) boss Gerry McCaughey (August 2005–September 2014), Royal Bank of Canada (RBC) CEO Gord Nixon (August 2001–July 2014), and Bank of Nova Scotia (Scotiabank) supremo Rick Waugh (December 2003–November 2013).

The chart below shows indexed month-end stock prices for each bank during their CEO’s tenure, as well as the performance of a benchmark, the S&P/TSX Composite Index Financials Sector Index GICS Level 1 (STFINL):


As the chart shows, all five men steered their companies through their biggest common test, the financial crisis, with little long-term damage to shareholders. (Downe’s performance benefits considerably from the bull market of the last two years).

Still, the banks diverged significantly in both strategy and performance over these CEO’s tenures. TD under Clark and BMO under Downe focused on expanding aggressively across the border, spending billions on acquisitions to take advantage of the U.S. recovery. Waugh’s Scotiabank looked further afield, building out its operations in South America and Asia. Nixon strengthened RBC’s hand in retail banking and wealth management, while McCaughey was forced to spend his first few years repairing CIBC’s reputation after the Enron scandal. The five banks’ differing strategies and circumstances produced divergent results.

The chart below shows the total return of the five companies stocks during the tenure of their CEOs, along with the corresponding figure for the STFINL during that time:


When it came to delivering shareholder value, Nixon and Clark were far out in front of the competition. And continuing a trend that began around the turn of the millennium, RBC, TD and Scotiabank emerged as the clear top three based on assets under management.

The challenges facing the five men’s successors, all chosen from within, include basement-dwelling interest rates, an ever-growing housing bubble, and the threat of disruption by financial technology upstarts. They’re currently facing scrutiny for their consumer lending business practices. And the competitive set has changed, with regional players in places like Alberta and Quebec expanding across provincial borders and some larger credit unions harbouring national ambitions.

Matching the success of their predecessors will be no easy task.