Wednesday, August 1, 2012


Since the mid-1950's when Canada's five largest banks began to establish headquarters in the city, Toronto has been the centre of Canada'a financial industry. It represents the largest sector of Toronto's economy, employing more than 230,000 people, most of whom work in the financial district.

 Royal Bank Plaza, Bay and Front Streets

Before beginning this blog post, I asked myself  "What role does the Financial District  play in the broader Canadian economy? And what are the differences between the financial industry in Canada and the US?" Obviously, these are difficult and complex questions.

Under the constitution, the federal government has sole authority over Canada's banks and has put in place regulations intended to ensure the soundness of its mortgages.  The five big Canadian banks tend to function as an oligopoly. They have similar fee structures in their retail operations, competing mainly on service quality. Unlike the US, Canada does not have numerous large and small banks, competing vigorously with each other and constantly innovating, especially in the area of investment banking. Until the financial crisis of 2008, Canada's banks may have been thought of as being over-regulated.

Another difference between the two countries is the availability of mortgage insurance provided by Canada Mortgage and Housing Corporation (CMHC) for all mortgages that cover more than 80% of the property value. Finally, in Canada, when an individual's mortgage has been foreclosed upon, the bank can go after his other assets. This provision tends to cause people to do whatever is possible to make their mortgage payments and avoid foreclosure. 

Recently, concerns have arisen about housing prices in Canada, particularly in some markets like Toronto and Vancouver. Questions are being asked, for example, about whether we are seeing a new relationship between housing prices and incomes, or if we are about to have a normal downward correction in the market, or if the housing market is going to crash in a manner recently experienced in the US. 


The Financial District extends south from Queen Street to Front Street and east from Yonge Street to University Avenue.  I arrived there at 8:00 a.m. on Monday July 30th, 2012, and walked around all morning taking pictures. I began at the Go station on Front Street. Along with the subway's Yonge line, this is where most of the estimated 100,000 commuters who work in the financial district arrive for work.

Toronto's Go Station at 8:00 a.m.
Commuters Exiting the Subway at Union Station

Leaving the Go Station via Union Station, I walked up and out onto Front Street where one of Toronto's oldest and grandest hotels, the Royal York, is located.
City of Toronto Work Crews in the Street at the Royal York Hotel 

First, I walked west on Front Street, then turned north onto York. There were dozens of people everywhere making their way to work at this early hour. I headed west on Wellington towards the RBC Centre, a 43-storey 2009 structure located west of University Avenue. The building is owned and operated by Cadillac Fairview with the Royal Bank as its anchor tenant. The building is expected to use 50% less energy than what is required under federal regulations and has won an award for environmental sustainability

 RBC Centre on the Right with the CN Tower on the Upper Left

 RBC Centre at Street Level

The RBC Centre is located just west of what is customarily thought of as the Financial District.  It is connected to the PATH, the extensive underground pedestrian retail network.more

 RBC Centre Entrance

The PATH network is a 27 kilometer network of underground shopping and entertainment facilities that extends throughout Toronto's downtown.  Construction began in the 1960's.  Interestingly, as I discovered when I asked at the Bank of Montreal how to access the PATH, I was told that photography is not allowed due to security concerns. Nor is photography allowed within any of the banks in the district. 

The next buildings I wanted to see were located at King and Bay. At York Street I stopped to take a picture of the Tellus Tower. more
 Tellus Tower, an Environmentally Innovative Design

Continuing on my way, I passed an interesting sight: a very old church standing in front of modern glass-fronted buildings made for a nice contrast.

A third stop I made on my way to King and Bay was to go east of Bay Street on Wellington to see Brookfield Place.  This building complex, was formerly known as BCE Place. more

On the left, Brookfield Place, Formerly BCE Place

 Brookfield Place at Street Level

The first King and Bay building I was interested in was the Toronto Dominion Centre.

This complex, built between 1967 and 1991, consists of six towers and a pavilion in which approximately 21,000 people have their employment.

Next, I saw the north part of Royal Bank Plaza, a building created to be the new corporate headquarters of the RBC when the decision was made to move it from Montreal.  There are two towers that include 14,000 windows. more

Royal Bank Plaza Viewed from Front Street

Next, I looked for First Canadian Place on the northwest corner of King and Bay.  This is the headquarters of the Bank of Montreal. It is Canada's tallest skyscraper and the 15th tallest building in North America. more 

  Bank of Montreal at First Canadian Place

Just west of this building on King Street, I saw a lovely small park - such a gem amongst all the concrete and glass.

Park at First Canadian Place

Also at King and Bay is Commerce Court. more

 Commerce Court

From here I made my way east to King and Yonge where I was interested in Scotia Plaza. more The building has an attractive entrance which I photographed. Then, I turned my back to it and looked across the street at One King West. As a wire obscured my view, I backed up a few steps towards the entrance to Scotia Place, only to be approached by a security guard who informed me that, while I was allowed to take a photo of Scotia Place from the sidewalk, photographing One King West from the Scotia Place property itself was prohibited. I explained my concern about the wire. He seemed OK about it so I told him that he was in one of my photos and offered to show it to him. When he saw himself as a very small figure with his back turned, he smiled. He was a very nice man and I was glad that people like him were keeping Toronto safe.

 Entrance to Scotia Plaza

The final building on my list was One King West, located on the south side of King just west of Yonge Street.  This is a condo hotel that was added onto the Dominion Bank Building, a heritage structure from 1914.  The combination of old and new is made to look very attractive. more
 One King West at Ground Level

One King West, Upper View

This completed my tour of the Financial District. I have to say, I was very impressed with the quality and variety of the architecture. But,more than that, what struck me was the  immense scale of what has been achieved here.

Which brings me back to the questions that began this post: how stable are Canada's banks? can the large amount of debt in Canada be handled if there is a downturn in the economy? and how over-heated are the various housing markets? Far from being an expert in finance and economics, all I feel competent to do is to ask more questions:  Will the recent federal changes to the regulations governing mortgages be adequate to tame the housing market ,i.e. to stop the increase in prices and avert a crash? Have Canada's banks avoided approving a great number of mortgages for people who will be vulnerable to foreclosure in an economic downturn? and finally, How worried should we be about the Standard and Poors warning about the risks faced by Canada's banks in the current situation? more

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