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Nearshore your strategic back office functions and set-up shop in Montreal
Nearshore your strategic back office functions and set-up shop in Montreal
Nearshore your strategic back office functions and set-up shop in Montreal
Nearshore your strategic back office functions and set-up shop in Montreal
Nearshore your strategic back office functions and set-up shop in Montreal
Nearshore your strategic back office functions and set-up shop in Montreal
Nearshore your strategic back office functions and set-up shop in Montreal
Nearshore your strategic back office functions and set-up shop in Montreal
Nearshore your strategic back office functions and set-up shop in Montreal
Nearshore your strategic back office functions and set-up shop in Montreal
Nearshore your strategic back office functions and set-up shop in Montreal
Nearshore your strategic back office functions and set-up shop in Montreal
Nearshore your strategic back office functions and set-up shop in Montreal
Nearshore your strategic back office functions and set-up shop in Montreal
Nearshore your strategic back office functions and set-up shop in Montreal
Nearshore your strategic back office functions and set-up shop in Montreal
Nearshore your strategic back office functions and set-up shop in Montreal
Nearshore your strategic back office functions and set-up shop in Montreal
Nearshore your strategic back office functions and set-up shop in Montreal
Nearshore your strategic back office functions and set-up shop in Montreal
Nearshore your strategic back office functions and set-up shop in Montreal
Nearshore your strategic back office functions and set-up shop in Montreal
Nearshore your strategic back office functions and set-up shop in Montreal
Nearshore your strategic back office functions and set-up shop in Montreal
Nearshore your strategic back office functions and set-up shop in Montreal
Nearshore your strategic back office functions and set-up shop in Montreal
Nearshore your strategic back office functions and set-up shop in Montreal
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Nearshore your strategic back office functions and set-up shop in Montreal

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  • 1. Feb 2011MONTREALYOUR COMPETITIVEGLOBAL FINANCIAL CENTRE
  • 2. CONTENTS‣ Canada at a glance‣ Montreal: a snapshot • Quality of life • Talent advantage • Montreal’s financial sector • Low operating costs‣ IFC/The value-added proposition • Proximity to markets • THE IFC incentive‣ A winning combination • Case study • Testimonials 2
  • 3. CANADA’S COMPETITIVE POSITIONSize and opportunity in Access to US marketlocal market: (NAFTA)‣ One of the world’s largest economies – larger than India’s High capability for ‣ Outperforms the rest of the G8 innovation (generous R&D tax credit)‣ Ranked by the Economic Intelligence Unit as the #1 place to do business in the G8 for the next 5 years* ‣ Canada ranks #2 in the G8 as regards the generosity of total R&D tax incentives*‣ Forecast to have fastest economic growth in G8 over next years‣ Growth in labour market forecast to be amongst highest in Large base of existing developed world 2009-2013 – 25% higher than USA investors * Source: International Financial Consulting Ltd 3
  • 4. CANADA’S COMPETITIVE POSITIONHigh credit rating Quicker and cheaper to‣ Canada has been enjoying a Triple start a business than in A international credit rating from USA and UK Moody’s since 2002* ‣ KPMG surveys highlight Canada leading the G8 in low business costs,Well-educated especially taxes *workforce ‣ The World Economic Forum placed Canada at the top of the rankings for‣ Canada’s educated workforce ranks #1 in the OECD for college streamlined procedures to set up a completion rates, #7 for university business completion rates*‣ The World Economic Forum ranked Canada #3 for the quality of its management schools in 2010 * * Source: International Financial Consulting Ltd 4
  • 5. CANADA LEADING AFTER THE FINANCIAL CRISISIn 2010, and for the 3rd Market capitalizationconsecutive year, the of TSX listed companiesWorld Economic Forum jumped from 2% to 4%ranked Canadas banking of world marketsystem as the healthiest capitalization in 2009in the world‣ In terms of banks’ soundness, Canada ranks at the 1st position, followed by New Zealand and Australia (NB: Hong Kong and Singapore rank 8th and 9th In 2010, the TSX respectively) registered a record‣ Federally regulated banking sector number of trades, with 72 banks jumping 4% from the‣ During the recent crisis, no banks previous year failed, none required injection of public capital and interbank money market continued to function 5
  • 6. WHAT YOU WON’T HAVE IN CANADAStricter regulationTougher banking Canadian Finance Minister Jim Flaherty has no intentionregulations like in of heading down the samethe US path as the US or UK: “WE have not had financial institutions fail in Canada and cost taxpayers billions ofRisk of higher taxes dollars”on financialinstitutions and Report on Business,bonuses January 13, 2010 6
  • 7. MONTREAL A SNAPSHOT2nd largest city in Recognized CanadianCanada leader in:‣ Population of 3.8M, ‣ AerospaceGDP of $125 ‣ Life sciencesbillion ‣ Larger proportion of employment in pharma than Boston and San Diego‣ 9% of Canada’s GDP ‣ Information & communications technologies ‣ FinanceStrong professional ‣ R&Dservices support ‣ Quebec has the highest proportion of employment in R&D in Canada‣ (accounting, legal, engineering, asset services)AN optimumlocation‣ Approx. 1 hour flight to New York, Boston, Toronto, Washington, and Philadelphia and 2 hour flight to Chicago. 7
  • 8. AN OUTSTANDING QUALITY OF LIFEMONTREAL: GLOBAL FINANCE AT HOME‣ Housing costs among North America’s lowest: ‣ More than 10,000 international restaurants ‣ Affordable single family house within 20 mins of downtown for less than 500k ‣ Low crime rate ‣ Rent for housing: under $1000 for 2 ‣ Home to: bedrooms, garden, 5 mins to subway, within 20 mins of downtown ‣ Grand Prix ‣ Lakefront country house for less than ‣ NHL 500k – 60 mins from downtown ‣ Canadian Football League‣ 7$ a day for daycare ‣ Rogers Cup (Tennis)‣ Access to free healthcare ‣ Nascar Nationwide‣ Affordable university tuitions ‣ International Jazz Festival ‣ Cirque du Soleil 8
  • 9. SHAPING YOUR NEW TALENT STRATEGY ‣ CFA Association is the 10th YOUR TALENT ADVANTAGE largest worldwide with more IN A CHANGING WORLD than 2,000 members (highest rate per capita) ‣ Highly educated workforce and diverse talent (+/- 50,000 ‣ Approximately 40,000 accountants accredited in immigrants per year) Quebec ‣ Strong support from universities ‣ In Montreal, over 16,000 (CA > 7,131; (COOP programs, placement) CMA > 4,600; CGA > 4,725) ‣ Centre for Innovation: ‣ Ranks 1st in North America for ‣ Ranks first in Canada for amount of the number of university research funding students per capita ‣ 30 units of academic research ‣ 168,000 university students, specifically in the areas of derivative including 20,000 foreigners of products, portfolio management, which: finance engineering, and financial accounting ‣ 8,000 students enrolled in finance related programs each year ‣ 400 graduate diplomas given every year (Masters and Ph.D.)McGill University is the HEC Montréal MBA John Molson School ofbest public university in Makes the Forbes Top Business / ConcordiaNorth America and 10 University ranked 1st inranks 18th among the The Only Canadian Quebec & 4th inworld’s top 200 school in the top one- Canada in theuniversities* year program ranking Corporate Knight School Ranking 2010 Source: Times Higher Education Supplement survey 2009 9
  • 10. YOUR TALENT ADVANTAGE60 LANGUAGES SPOKEN IN MONTREAL ‣ 80 languages spoken45 ‣ The most trilingual population in Canada: nearly 20% of the population is fluent in at least three languages ‣ Over 50% is fluent in both French and English3015 0 Toronto Calgary Vancouver Ottawa Québec Winnipeg Montréal Biliguism Trinliguism Source: Statistics Canada, 2006 Census and Association of Canadian Studies 10
  • 11. MONTREAL’S FINANCIAL SERVICES INDUSTRY 3,000 companies OTHER Local giants Over125,000 jobs include:‣ 40% in securities, pension funds, and fund management‣ 38% in banking‣ 22% in insuranceHome to: 11‣ The derivatives arm of the TMX Group which recently partnered with the London Stock Exchange‣ The Investment Industry Association of Canada (IIAC) chose TMX’s CDCC (Canadian Derivatives Clearing Corporation) to develop a central counterparty facility for the fixed income market‣ Finance related IT expertise thanks to CGI and Morgan Stanley (Over 7,000 jobs)‣ Large talent pool in financial and actuarial mathematics 11
  • 12. COST QUALITY FOR FINANCIAL SERVICESIBM-PLI LOCATION BENCHMARKING TOOL - NORTHAMERICA Source : March 2010 12
  • 13. LOW OPERATING COSTS BENEFITS IN KIND Gross earning $30,000 $50,000 $75,000 (annual) 7 & 8 Deductions QPP1 $1,311.75 $2,118.60 $2,118.60 QPIP2 $145.20 $242.00 $300.08 EP3 $414.00 $583.74 $583.74 Federal Taxes $2,127.38 $5,150.91 $9,736.13 Quebec Taxes $2,545.00 $6,169.00 $11,169.00 $6,543.33 21.81% $14,264.25 28.53% $23,907.55 31.88% Net earnings $23,456.67 $35,735.75 $51,092.45 Employer’s Contributions QPP1 $1,311.75 $2,118.60 $2,118.60 QPIP2 $203.10 $338.50 $419.74 EP $579.60 $817.24 $817.24 HSF4 $810.00 $1,350.00 $2,025.00 LSC5 $24.00 $40.00 $48.40 OHS6 $180.00 $300.00 $363.00 $3,108.45 10.36% $4,964.34 9.93% $5,791.98 7.72% Total Cost $33,108.45 $54,964.34 $80,791.981: Québec Pension Plan (4.95%) 5: Labour Standards Commission (0.08%)2: Québec Parental Insurance Plan (employee 0.484%; employer 0.677%) 6: Occupational Health and Safety (0.6% in the services sector)3: Employment Insurance (employee 1.38%; employer 1.932%) 7: Vacations are a minimum of 4%4: Health service Fund (2.7% of total payroll is below $1 million) 8: Gross earnings include holidays (+/- 10 days = 4%) 13
  • 14. LOW OPERATING COSTS REAL ESTATE & WAGES Weighted Average Class A Gross Rental RateCity (CBD) Rent ($/sq. ft./annum) Price differenceNew York - Midtown 64.51 63.65%Toronto 59.86 51.85%Boston 40.52 2.79% One US$ = C$ 1.02 as of March 2010Montreal 39.42 Base  Source: CBRE May 2010 Estimated Median Annual Salary - Financial Services (Without benefits, in $CAD) Back office employees Montreal Chicago % Diff Computer Operations Manager $96,754 $107,113 10.71% Business Manager $91,701 $101,477 10.66% Risk Management Manager $94,641 $103,113 8.95% Financial Analysis Manager $96,445 $109,768 13.81% Financial Analyst $74,571 $77,746 4.26% Economic Analyst Superviser $89,846 $92,373 2.81% Database administrator $88,014 $96,549 9.70% Credit Manager $84,995 $92,413 8.73% Quality Assurance Programmer $82,088 $85,072 3.64% Account Manager Sales $79,345 $86,247 8.70% Account Supervisor $70,385 $74,335 5.61% Marketing Representative $61,773 $62,058 0.46% ‣ The average median Public Relations Representative $59,947 $60,106 0.27% base salary in Systems analyst $70,874 $76,211 7.53% Budget analyst $66,558 $70,431 5.82% Montreal is over 6% Benefits analyst $58,138 $61,984 6.62% lower than in Market Research Analyst $67,677 $70,002 3.44% Chicago Payroll Supervisor $62,945 $68,544 8.90% Accounting Supervisor (Professional) $78,645 $85,634 8.89% ‣ For executive Accountant $55,583 $59,292 6.67% poisitions, the Foreign-Exchange Trader $92,011 $99,838 8.51% difference is much Funds Electronic Transfer Clerk $43,340 $43,746 0.94% Administrative assistant $46,516 $48,449 4.16% greater Average difference 6.51% 14
  • 15. LOW OPERATING COSTS CORPORATE TAX RATES A NORTH AMERICAN COMPARISON OF 2011 CORPORATE TAX RATES (Effective Tax Rate %) Difference with Federal Province/State City TOTAL MontrealMontreal 16.50* 11.90 -- 28.40 baseToronto 16.50* 12.00 -- 28.50 0.35%Chicago 32.45 7.30 -- 39.75 39.96%Boston 31.94 8.75 -- 40.69 43.27%New York 29.00 7.10 10.05 46.15 62.50% Corporate tax rate in Chicago 40% higher than in Montreal *The federal tax rate in Canada will go down to 15% in 2012 Source: January 2010 15
  • 16. WHY IFC MONTREAL?IFC - MONTREAL IS A PRIVATE CORPORATION DEDICATEDTO DEVELOPING THE FINANCIAL SERVICES SECTOR OF THECITY OF MONTREAL Determining whether your Connecting you to our company is eligible for the IFC network of partners and measure collaborators to optimize your business Guiding you through the opportunities application process Answering your requests Providing expertise and for information counselling on financial tax incentives 16
  • 17. THE IFC INCENTIVE: CORPORATIONSCorporate incentive ELIGIBILITY ‣ Activities must involve at least one of the 25 Qualified InternationalAn unlimited* annual refundable tax Financial Transactions (QIFT) – seecredit of 30% on salaries paid to appendixemployees of an IFC (capped at $20,000per job per year representing a salary of ‣ The Financial Transaction must cross$66,667). a border:*unlimited in time and amount ‣ For local client > transaction regarding foreign product ‣ For foreign client > transaction regarding either local or foreign product ‣ The transactional decision processFiscal impact for the must be conducted in Montrealcorporation (over 1 year) ‣ The operations must be conducted by a corporation and employ at least 6 employees Salary paid $40K $50K $66.67K $75KTax credit per job $12K $15K $20K $20KTax credit for 100 employees $1,2M $1,5M $2,0M $2,0MTax credit for 200 employees $2,4M $3,0M $4,0M $4,0MTax credit for 300 employees $3,6M $4,5M $6,0M $6,0M 17
  • 18. THE IFC INCENTIVE HOW TO QUALIFY?QUALIFIED INTERNATIONAL FINANCIALTRANSACTIONS (QIFT)1. Dealing in securities 14. Fiduciary services2. Clearing house services 15. Factoring services3. Investment advising and 16. Financial leasing portfolio management 17. Organization of a qualified4. Deposits investment fund5. Loans 18. Administration of a qualified6. Loans and deposits among investment fund IFCs 19. Management of a qualified7. Acceptance or issuance of investment fund letters of credit 20. Distribution of the shares of a8. Financing by means of a bill qualified investment fund of a exchange 21. International treasury management9. Foreign exchange operations 22. Back-office operations10. Financial packaging 23. Documentary collection (engineering) 24. Activities performed under the11. Development or design of Quebec Immigrant Investor new financial products Program12. Insurance brokerage 25. Discount operations carried out13. Reinsurance regarding a letter of credit or a commercial instrument 18
  • 19. THE IFC INCENTIVE: FOREIGN EXPERTS deduction in the calculation of all taxable income Year 1 100% Year 2 100% Year 3 75% Year 4 50% Year 5 37.5%Hypotheses‣ $250,000 annual base salary‣ 2009 income tax rates have been applied to the 5 year payroll computation‣ Income tax rates have been computed assuming the employee has a spouse and four children as dependents You could save $176,136.80 over 5 years by working out of Montreal instead of Toronto* 19
  • 20. THE VALUE-ADDED PROPOSITION ‣ Proximity to large markets ‣ Local market potential ‣ Montreal’s pension funds among largest in Canada ‣ Strategic location Access to International 65% of North Financial American ‣ Low cost rent Centre Status Markets ‣ Low salaries‣ International city ‣ Among lowest corporate‣ Large talent income tax pool INTERNATIONAL rates in North‣ Centre for FINANCIAL CENTRE America (29.9%) innovation STATUS ‣ An appealing business case Your talent Low operating advantage costs ‣ 30% refundable tax credit ‣ 37.5 - 100% personal income tax exemption for foreign specialists ‣ Approx. 40% higher corporate tax rate in Chicago compared to Montreal 20
  • 21. OTHER INCENTIVES LABOUR TRAINING PROGRAMThe financial assistance Grant allowed for theoffered by Emploi- creation of more than 50Québec is flexible jobs‣ For example, it can apply to either ‣ Up to 25% of eligible training labour force training costs or expenses (max $2M) recruitment expenses. ‣ Up to 50% of human resource‣ The financial assistance will vary management services (max between 25% to 50% of eligible $100,000) expenses depending on the number of jobs created and location. 21
  • 22. AN IFC BUSINESS CASE COST COMPARISONFOR A 25 FTE FINANCIAL SERVICES BACK OFFICE IN MONTREAL Canada   US   Montreal Toronto NYC Boston ChicagoRevenues 3 279 3 548 4 207 3 886 3 628Costs 2 523 2 729 3 236 2 989 2 791Net profit before corporate income taxes 757 819 971 897 837Corporate income tax National tax 125 135 282 286 272 Provincial/State tax 90 98 167 78 61Total income taxes 215 233 448 365 333Total costs, including income taxes 2 737 2 962 3 685 3 354 3 124Total costs including MTL IFC measure 2 377         Revenues: "Cost-plus 30%" -- normal corporate income tax rate (‘000 USD) Montreal Toronto NYC Boston Chicago% difference between MTL & other cities base 8,21% 34,60% 22,52% 14,10%With MTL IFC measure   24,60% 54,98% 41,07% 31,38% 22
  • 23. AN IFC BUSINESS CASE EMPLOYEE INCENTIVES FOREIGN EXPERTS AND LOCAL EMPLOYEES Year 1 Year 2 Year 3 Year 4 Year 5 QUEBEC PERSONAL TAX Total (A) (A) (B) (C ) (D)Gross earnings $250,000 $250,000 $250,000 $250,000 $250,000 $1,250,000 DeductionsQuebec pension plan $2,119 $2,119 $2,119 $2,119 $2,119Quebec parental insurance plan $300 $300 $300 $300 $300Unemployment insurance contribution $584 $584 $584 $584 $584  $3,002 $3,002 $3,002 $3,002 $3,002 Salary before income tax deductions $246,998 $246,998 $246,998 $246,998 $246,998 Federal income tax $48,427 $48,427 $48,427 $48,427 $48,427 Quebec income tax $0 $0 $6,578 $20,965 $28,465 Net earnings $198,571 $198,571 $191,993 $177,606 $170,106 $936,845Hypothesis‣ (A) 100% Quebec tax exemption on salary earned from an IFC for years 1 & 2‣ (B) 75% Quebec tax exemption on salary earned from an IFC for year 3‣ (C) 50% Quebec tax exemption on salary earned from an IFC for year 4‣ (D) 37.5% Quebec tax exemption on salary earned from an IFC for year 5‣ 2009 income tax rates have been applied to the 5 year payroll computation‣ Income tax rates have been computed assuming that the employee has a spouse and 4 children as dependents 23
  • 24. AN IFC BUSINESS CASE EMPLOYEE INCENTIVES FOREIGN EXPERTS AND LOCAL EMPLOYEES Year 1 Year 2 Year 3 Year 4 Year 5 ONTARIO PERSONAL TAX Total (A) (A) (B) (C ) (D)Gross earnings $250,000 $250,000 $250,000 $250,000 $250,000 $1,250,000   Deductions  OPP $2,119 $2,119 $2,119 $2,119 $2,119  EI $732 $732 $732 $732 $732   $2,850 $2,850 $2,850 $2,850 $2,850        Salary before income tax deductions $247,150 $247,150 $247,150 $247,150 $247,150     Federal income tax $58,019 $58,019 $58,019 $58,019 $58,019     Ontario income tax $36,989 $36,989 36 989 36 989 36 989     Net earnings $152,142 $152,142 $152,142 $152,142 $152,142 $760,708Hypothesis‣ 2009 income tax rates have been applied to the 5 year payroll computation‣ Income tax rates have been computed assuming that the employee has a spouse and 4 children as dependents TOTAL NET SAVINGS OF $176,137 OVER 5 YEARS 24
  • 25. AN IFC BUSINESS CASE MAPLES FINANCEOn october 1st 2009, MAPLESFinance, an independent global MaxiNe Rawlins, CEOfund administrator that provides of MAPLES Financefiduciary, accounting andadministrative services, described theannounced the opening of a montreal office as “amontreal office to service thenorth american region and its long-term investmentgrowing fund administration in developing abusiness. regional hub that expands MAPLESMAPLES Finance selected Finance’s globalMontreal for its position as aglobal financial centre and footprint.”gateway to north americanmarkets. The resources andadvantages the city offers globalfinancial service companiesinclude: a base of highly trainedlocal financial services andtechnology professionals; a largecosmopolitan city with a well-educated population; a diversedemographic and multi-lingualcapabilities; and world-classuniversities. 25
  • 26. TESTIMONIALS “We are delighted to expand our internal operations in Montreal, one of Canada’s leading financial centers that is well regarded for its highly skilled talent base”Jim Rosenthal, ManagingDirectorMorgan Stanley, May 2008“Compared to other largecentres, Montreal is cost-effective, plus the quality of lifeis excellent. It helps us attract Gregory Chrispin, Managing Directortalent.” State Street Global Advisors Canada, December 2008 “We will look to grow our onshore fund administration business particularly in North America. Opening an office in Montreal expands Maples Finance’sMaxine Rawlins, Chief global presence. With offices in sevenExecutive Officer jurisdictions, we decided to expand intoMaples Finance Fund Montreal for its highly trained workforce,Administrator, May 2009 its established financial expertise and proximity to North American financial centres.”« Montreal is the Joseph Iannicelli,country’s best- President & CEOkept secret » Standard Life Canada, May 2008 26
  • 27. THANKYOU John Rooke Vice-President, Business Development JOHN.ROOKE@CFIMONTREAL.COM INTERNATIONAL FINANCIAL CENTRE MONTREAL 1130 Sherbrooke West, 16th floor MONTREAL (QC) 514-287-1540 WWW.IFCMONTREAL.COM

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