Value Proposition IFC Montreal (To) (2)

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Value Proposition IFC Montreal (To) (2)

  1. 1. MONTREAL YOUR COMPETITIVE GLOBAL FINANCIAL CENTRE 2010
  2. 2. MONTREAL YOUR COMPETITIVE GLOBAL FINANCIAL CENTRE CONTENTS: 1. Montreal: a snapshot 2. Montreal’s financial sector 3. The value-added proposition  Proximity to markets  Quality of life  Talent advantage  Low operating costs  International Financial Centre incentive 4. Typical business case 5. An excellent reputation 2
  3. 3. MONTREAL: A SNAPSHOT • Population of 3.8M, 2nd largest city in Canada • GDP of $125 billion  9% of Canada’s GDP • Approx. 1 hour flight to New York, Boston, Toronto, Washington, and Philadelphia and 2 hours flight to Chicago. • Strong professional services support (accounting, legal, engineering, asset services) • Recognized Canadian leader in:  Aerospace  Life sciences  Larger proportion of employment in pharma than Boston and San Diego  Information technology  Finance  R&D  Quebec has the highest proportion of employment in R&D in Canada 3
  4. 4. MONTREAL’S FINANCIAL SECTOR MONTREAL’S FINANCIAL SERVICES INDUSTRY • 3,000 companies • Over125,000 jobs  40% in securities, pension funds, and fund management  38% in banking  22% in insurance • Local giants include: • Home to:  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 CCDC (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 4
  5. 5. THE VALUE-ADDED PROPOSITION Access to 65% of Low International A COMPETITIVE Your talent North American operating Financial Centre GLOBAL FINANCIAL advantage markets costs status CENTRE • Proximity to large • International city • Low cost rent • 30% refundable tax markets credit • Large talent pool • Low salaries • Local market • 37.5 - 100% personal • Centre for • Among lowest potential income tax exemption innovation corporate income for foreign specialists • Montreal’s pension tax rates in North funds among America (29.9%) largest in Canada • An appealing • Strategic location business case 5
  6. 6. YOUR TALENT ADVANTAGE MONTREAL: SHAPING YOUR NEW TALENT STRATEGY IN A CHANGING WORLD • Highly educated workforce and diverse talent (+/- 50,000 immigrants per year) • Strong support from universities (COOP programs, placement) • Centre for Innovation:  Ranks first in Canada for amount of research funding  30 units of academic research specifically in the areas of derivative products, portfolio management, finance engineering, and financial accounting • CFA Association is the 10th largest worldwide with more than 2,000 members (highest rate per capita) • Approximately 40,000 accountants accredited each year in Quebec  In Montreal, over16,000 (CA  7,131; CMA  4,600; CGA  4,725) • Ranks 1st in North America for the number of university students per capita  168,000 university students, including 20,000 foreigners of which:  close to 8,000 students enrolled in finance related programs each year  close to 400 graduate diplomas given every year (Masters and Ph.D.) According to the prestigious Times Higher Education HEC Montréal MBA Makes the Forbes Top 10 Supplement survey 2009, McGill University is the best  Only Canadian school in the top one-year program ranking public university in North America and ranks 18th among the world’s top 200 universities Source : Attractiveness Indicators 2009-2010 6
  7. 7. YOUR TALENT ADVANTAGE (CONT’D) LANGUAGES SPOKEN IN MONTREAL • The most trilingual population in Canada: nearly 20% of the population is fluent in at least 3 languages • Over 50% is fluent in both French and English … 80 languages spoken Source: Statistics Canada, 2006 Census and Association of Canadian Studies 7
  8. 8. LOW OPERATING COSTS WAGES  The average median base salary in Montreal is 5.4% lower than in Toronto Source: Economic Research Institute (ERI), April 2010 8
  9. 9. LOW OPERATING COSTS BENEFITS IN KIND 9
  10. 10. LOW OPERATING COST REAL ESTATE Weighted Average Class A Gross Rental (CBD)  The average gross cost of “Class A” rental is 52% more expensive in Toronto City Rent price (USD/s.f.) Price difference with than in Montreal Montreal New York 64.51 63.6% Toronto 59.86 51.9% Vancouver 55.49 40.8% Miami 44.73 13.5% Boston 40.52 2.8% Montreal 39.42 - CBD = Central Business District Source: Global Market Rents, , May 2010 Methodology: Local office costs are reported in USD on a per annum basis. This number reflects all occupancy costs, and therefore corresponds to “gross” rents. 1 USD = 1.02 CAD 10
  11. 11. LOW CORPORATE TAX RATES A NORTH AMERICAN COMPARISON OF CORPORATE TAX RATES Corporate Income Taxation Rates – 2010 North America Effective Tax Rate (%) Federal Province/State City Total Difference with Montreal Montreal 18.00* 11.90 -- 29.90 -- Toronto 18.00* 12.00 -- 30.00 0.3% Chicago 32.45 7.30 -- 39.75 32.9% Boston 31.94 8.75 -- 40.69 36.1% New York 29.00 7.10 10.05 46.18 54.4% * The federal tax rate in Canada will go down to 16.5% in 2011 and 15% in 2012 Source: January 2010 11
  12. 12. INTERNATIONAL FINANCIAL CENTRE INCENTIVE CORPORATION Corporate Incentive ELIGIBILITY An unlimited* annual refundable tax credit of • Activities must involve at least one of the 25 30% on salaries paid to employees of an IFC Qualified International Financial Transactions (capped at $20,000 per job per year (QIFT) – see appendix representing a salary of $66,667) • The Financial Transaction must cross a border: *unlimited in time and amount  For local client  transaction regarding Fiscal impact for the corporation (over one year) foreign product  For foreign client  transaction Salary paid $40K $50K $66.67K $75K regarding either local or foreign product Tax credit per $12K $15K $20K $20K job • The transactional decision process must be conducted in Montreal Tax credit for $1,2M $1,5M $2,0M $2,0M 100 employees • The operations must be conducted by a Tax credit for $2,4M $3,0M $4,0M $4,0M corporation and employ at least 6 employees 200 employees Tax credit for $3,6M $4,5M $6,0M $6,0M 300 employees 12
  13. 13. INTERNATIONAL FINANCIAL CENTRE INCENTIVE QUALIFIED INTERNATIONAL FINANCIAL TRANSACTIONS (QIFT) 1. Dealing in securities 14. Fiduciary services 2. Clearing house services 15. Factoring services 3. Investment advising and portfolio 16. Financial leasing management 17. Organisation of a qualified investment fund 4. Deposits 18. Administration of a qualified investment 5. Loans fund 6. Loans and deposits among IFCs 19. Management of a qualified investment 7. Acceptance or issuance of letters of credit fund 8. Financing by means of a bill of a exchange 20. Distribution of the shares of a qualified 9. Foreign exchange operations investment fund 10. Financial packaging (engineering) 21. International treasury management 11. Development or design of new financial 22. Back-office operations products 23. Documentary collection 12. Insurance brokerage 24. Activities performed under the Quebec 13. Reinsurance Immigrant Investor Program 25. Discount operations carried out regarding a letter of credit or a commercial instrument 13
  14. 14. INTERNATIONAL FINANCIAL CENTRE INCENTIVE FOREIGN EXPERTS THE IFC INCENTIVE SUMMARIZED:  As a foreign employee, you could save $176,136.80 over 5 years by working out of Montreal instead of Toronto* Foreign Employee Benefits *Assumptions: A deduction in the calculation of all taxable income for a period of five years: • $250,000 annual base salary • 2009 income tax rates have been applied to the 5 year payroll computation Year 1: 100% • Income tax rates have been computed assuming the Year 2: 100% employee has a spouse and four children as dependents Year 3: 75% Year 4: 50% Year 5: 37.5% 14
  15. 15. INTERNATIONAL FINANCIAL CENTRE INCENTIVE FOREIGN EXPERTS AND LOCAL EMPLOYEES (CONT’D) QUEBEC PERSONAL TAX Year 1 Year 2 Year 3 Year 4 Year 5 $ $ $ $ $ Total (A) (A) (B) ( C) (D) Gross earnings 250 000.00 250 000.00 250 000.00 250 000.00 250 000.00 1 250 000.00 Deductions Quebec pension plan 2 118.06 2 118.06 2 118.06 2 118.06 2 118.06 Quebec parental Insurance plan 300.08 300.08 300.08 300.08 300.08 Unemployment Insurance contribution 583.74 583.74 583.74 583.74 583.74 3 002.42 3 002.42 3 002.42 3 002.42 3 002.42 Salary before income tax deductions 246 997.58 246 997.58 246 997.58 246 997.58 246 997.58 Federal income tax 48 427.00 48 427.00 48 427.00 48 427.00 48 427.00 Quebec income tax - - 6 578.00 20 965.00 28 465.00 Net earnings 198 570.58 198 570.58 191 992.58 177 605.58 170 105.58 936 844.90 Assumptions (A) 100% Quebec tax exemption on salary earned from an International Financial Centre for years 1 and 2 (B) 75% Quebec tax exemption on salary earned from an International Financial Centre for year 3 (C) 50% Quebec tax exemption on salary earned from an International Financial Centre for year 4 (D) 37.5% Quebec tax exemption on salary earned from an International Financial Centre 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 15
  16. 16. INTERNATIONAL FINANCIAL CENTRE INCENTIVE FOREIGN EXPERTS AND LOCAL EMPLOYEES (CONT’D) ONTARIO PERSONAL TAX Year 1 Year 2 Year 3 Year 4 Year 5 Total $ $ $ $ $ Gross Salary 250 000.00 250 000.00 250 000.00 250 000.00 250 000.00 1 250 000.00 Deductions OPP 2 118.60 2 118.60 2 118.60 2 118.60 2 118.60 EI 731.79 731.79 731.79 731.79 731.79 2 850.39 2 850.39 2 850.39 2 850.39 2 850.39 Salary Before Tax Deductions 247 149.61 247 149.61 247 149.61 247 149.61 247 149.61 Federal Tax 58 019.00 58 019.00 58 019.00 58 019.00 58 019.00 Ontario Tax 36 989.00 36 989.00 36 989.00 36 989.00 36 989.00 Net earnings 152 141.61 152 141.61 152 141.61 152 141.61 152 141.61 760 708.10 Assumptions  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 $176,136.80 OVER 5 YEARS 16
  17. 17. MONTREAL’S COST ADVANTAGE SUMMARIZED COST COMPARISON FOR A 20 FTE FINANCIAL SERVICES BACK OFFICE IN MONTREAL “COST +30%”  PERCENTAGE DIFFERENCE BETWEEN MONTREAL AND OTHER CITIES Montreal Toronto Boston Chicago New York Base 9.7% 25.2% 15.7% 46.2% 17
  18. 18. IBM-PLI LOCATION BENCHMARKING TOOL COST QUALITY MAP FOR FINANCIAL SERVICES – NORTH AMERICA March 2010 18
  19. 19. OTHER INCENTIVES LABOUR TRAINING PROGRAM The financial assistance offered by Emploi-Québec is flexible. For example, it can apply to either labour force training costs or recruitment expenses. The financial assistance will vary between 25% to 50% of eligible expenses depending on the number of jobs created and location.  Grant allowed for the creation of more than 50 jobs:  Up to 25% of eligible training expenses (max $4M)  Up to 50% of human resource management services (max $100,000) 19
  20. 20. TYPICAL BUSINESS CASE MAPLES FINANCE: ON OCTOBER 1ST 2009, MAPLES FINANCE, AN INDEPENDENT GLOBAL FUND ADMINISTRATOR THAT PROVIDES FIDUCIARY, ACCOUNTING AND ADMINISTRATIVE SERVICES, ANNOUNCED THE OPENING OF A MONTREAL OFFICE TO SERVICE THE NORTH AMERICAN REGION AND ITS GROWING FUND ADMINISTRATION BUSINESS. MAPLES FINANCE SELECTED MONTREAL FOR ITS POSITION AS A GLOBAL FINANCIAL CENTRE AND GATEWAY TO NORTH AMERICAN MARKETS. THE RESOURCES AND ADVANTAGES THE CITY OFFERS GLOBAL FINANCIAL SERVICE COMPANIES INCLUDE: A BASE OF HIGHLY TRAINED LOCAL FINANCIAL SERVICES AND TECHNOLOGY PROFESSIONALS; A LARGE COSMOPOLITAN CITY WITH A WELL-EDUCATED POPULATION; A DIVERSE DEMOGRAPHIC AND MULTI-LINGUAL CAPABILITIES; AND WORLD-CLASS UNIVERSITIES. MAXINE RAWLINS, CEO OF MAPLES FINANCE DESCRIBED THE MONTREAL OFFICE AS “A LONG-TERM INVESTMENT IN DEVELOPING A REGIONAL HUB THAT EXPANDS MAPLES FINANCE’S GLOBAL FOOTPRINT.” « We will look to grow our onshore fund administration business particularly in North America. Opening an office in Montreal expands Maples Finance’s global presence. With offices in seven jurisdictions, we decided to expand into Montreal for its highly trained workforce, its established financial expertise and proximity to North American financial centres. » Maxine Rawlins, Chief Executive Officer Maples Finance Fund Administrator, May 2009 20
  21. 21. IFC - MONTREAL IFC - MONTREAL IS A PRIVATE CORPORATION DEDICATED TO DEVELOPING THE FINANCIAL SERVICES SECTOR OF THE CITY OF MONTREAL We help you by: 1. Determining whether your company is eligible for the IFC Measure and guiding you through the process 2. Providing expertise and counselling on financial tax incentives 3. Connecting you to our network of partners and collaborators to optimize your business opportunities 4. Answering your requests for information 21 21
  22. 22. AN EXCELLENT REPUTATION « 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, Managing Director Morgan Stanley, May 2008 Thank you! JOHN ROOKE VICE-PRESIDENT, BUSINESS DEVELOPMENT INTERNATIONAL FINANCIAL CENTRE - MONTREAL 404 ST. DIZIER STREET MONTREAL (QUEBEC)  514-287-1540  JOHN.ROOKE@CFIMONTREAL.COM  WWW.IFCMONTREAL.COM 22

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