Some thoughts from a long time observer (now retired but previously involved in a number of projects in the financial services sector) on the reasons behind all the demand for additional downtown Toronto office space by the big five banks:
First of all, the term HQ or Headquarters is being used quite loosely. The most restrictive use would be the Legal Head Office, which for example for Scotiabank is still in Halifax, for BMO is still in Montreal. Very small footprints. The major Corporate Headquarters / Corporate Offices for all of the big five are obviously here in Toronto. Within the Corporate Headquarters the actual Executive Suites themselves may actually be fairly small - the areas containing the senior executives, Chairman, CEO, President, senior Vice Presidents, and typically some closely related areas such as the Corporate Legal and the Corporate Secretary's groups.
The main corporate offices themselves - the various business areas, support functions (Divisional operations staff, Information Technology, Real Estate etc.) may be located in the same building as the executive suites, or quite often, distributed around other buildings generally nearby. For this thread, the term Headquarters of HQ would probably best be considered to be read as 'corporate office areas'.
The banks have seen material growth in head count and office space requirements over the past years. A long term trend has been automation and centralization of processing functions, accompanied by major down-sizings of branch and regional support staff. It's been going on for over 50 years, since the introduction of third generation computers and regional proof, which eliminated the need to maintain each individual bank account manually in the branches - updating every deposit, withdrawal, cheque cashing using posting machines and ledger cards (the reason why branch banking hours used to be limited to 10 AM to 3 PM (or was otherwise known as 'Bankers' Hours).
The corollary has been that for each cycle, every 'x' many jobs eliminated in the branch and regional office networks, 'y' jobs have been added in the corporate and head office support areas. The jobs lost in the branches and regional areas outnumbered the ones being gained in the Head Office areas, but to my knowledge, there has always been a net gain for the Toronto area. This transition of jobs within the financial services sector has happened in wave after wave of automation and centralization cycles in the industry over the past half century, and is still continuing to take place.
Other factors driving the growth in corporate department office space footprints for the big five include:
1. Ongoing organic growth by the Canadian banks, both domestically, and internationally,
2. Ongoing development of new, often information technology (fintech) related, products and services - developed and operated by the various corporate support areas
3. Continuously increasing government imposed regulatory and compliance requirements - in particular for money laundering (i.e. the AML systems), as well as in securities and trading services
4. Increasing requirements for information security - protection against hacking, DDS attacks, spoofing, and other fraud related concerns.
These are just some of the big ones - there will be other factors driving increasing space requirements as well.
My suspicion is that TD's occupancy in 160 Front is more related to ongoing organic growth of its footprint in Toronto, along with consolidation of some of its other locations (possibly staff in the 310-320-330 Front Street buildings, some of the staff in the Creekside complex, etc.) - similar to what Royal Bank did with its Water Park Place building.
My understanding, from what I have read / heard, is that:
- CIBC will be moving its entire corporate and executive head office areas into its new buildings
- Not sure if Scotiabank will be moving its executive suite into the new Bay Adelaide North building - BA North and the Scotia Plaza buildings are sufficiently close together that the executive suite could stay in Scotia Plaza.
- TD's corporate office may very well be staying in TD Center, and not moving to 160 Front Street - personally, what I would expect, but no inside knowledge on that one though.
- Royal Bank's corporate offices are staying in the Royal Bank Plaza.
- Bank of Montreal is building a major campus within the old Eatons store, but which would not really be suitable for the location of an Executive Head Office suite.
On a side note, if it is not included as a candidate for relocation into BMO's new Eaton Centre campus, their Yonge and Sheppard facility should be a prime candidate for a future consolidation - the space is truly not up to standard, by a long shot. Also the BNS campus at Eglinton and Birchmount, which from what I recall is to stay as one of the four remaining BNS campus locations in the Toronto area, should also be a prime candidate for future eventual consolidation - an incredible piece of land with a couple of buildings surrounded by gigantic parking areas.
And, for qualification of my perspective - my first permanent full time employment was at one of the big five banks, in September 1969.
