Oct. 3 (Bloomberg) -- Canada's banks will make more foreign acquisitions to take advantage of the stronger Canadian dollar, analysts and investors said, after the industry spent $10.5 billion yesterday in its biggest-ever shopping spree abroad.

Toronto-Dominion Bank agreed to buy New Jersey's Commerce Bancorp Inc. for $8.3 billion, making it the seventh-largest North American bank by branches. Royal Bank of Canada, the country's biggest bank, will pay $2.2 billion for RBTT Financial Holdings of Trinidad and Tobago, doubling its Caribbean network.

Canada's five largest banks, including Bank of Nova Scotia, Bank of Montreal and Canadian Imperial Bank of Commerce, have been looking to expand abroad because they're blocked by the federal government from merging. With the Canadian dollar at a 31-year high, foreign takeovers are a bargain.

``The dollar recognizes that the country's in a strong position; the financial sector's in a strong position; our customers in Canada are in a strong position,'' Bank of Nova Scotia Chief Executive Officer Richard Waugh told reporters in Toronto today. ``All that comes together, and that gives all of us some great opportunities that you're starting to see.''

Canada's second-biggest bank passed on RBTT because ``it didn't fit for us,'' Waugh said. Scotiabank is already the largest Caribbean bank, he said, with more than 200 branches.

Canada's currency reached equal value with the U.S. dollar for the first time in three decades on Sept. 20. It touched $1.0091 on Oct. 1, the highest since November 1976. Today it traded at $1.0034 at 12:16 p.m. in Toronto.

Going South

``Canadian banks are using the dollar at parity to buy assets cheaply,'' said Andrew Martyn, who helps manage the equivalent of about $475 million at Toronto-based Davis-Rea Ltd. ``They're going to continue going south for acquisitions, as there's almost nothing left in Canada.''

In addition, Canadian banks haven't been hurt as much as U.S. banks by rising defaults of subprime loans because they offer fewer high-risk mortgages, analysts said.

``U.S. banks are probably facing another four to eight quarters of pain,'' said Paul Hand, managing director, equity trading at RBC Capital Markets. ``Their willingness to enter into deals has increased.''

Canada's financial companies have disclosed $15.7 billion of acquisitions of foreign-owned financial companies this year, more than double the $7.6 billion reported in all of last year, data compiled by Bloomberg show.

Competitive Pressures

John Aiken, an analyst at Dundee Securities Corp., wrote yesterday in a note to investors that he ``would not be surprised to see other Canadian financial institutions make large acquisitions in the near term.''

``With the dollar being the way that it is, there's no question that Canadian banks can take advantage of this,'' said Jacob Jegher, an analyst at Boston-based research firm Celent. ``There's still some banks there that haven't made a move yet, and they're going to be feeling the competitive pressures.''

Jegher said Bank of Montreal, which has operations in the Chicago area through its Harris Bank unit, is one of the more likely acquirers. Harris Bank was one of several companies approached by Minnesota-based TCF Financial Corp. to make a takeover bid, Crain's Chicago Business reported last month.

Ralph Marranca, a spokesman at the Toronto-based bank, said the bank always looks at potential acquisitions. He declined to be more specific.

Concentration of Power

Canadian banks have been banned from merging since 1998, when the Finance Minister, Paul Martin, blocked two sets of combinations on concern they would lead to a concentration of ``economic power in the hands of an even smaller number of very large institutions.''

Jim Flaherty, the current Finance Minister, has said that re-examining the issue isn't a priority for the ruling Conservative government.

Canadian bank mergers are ``never going to happen,'' Toronto-Dominion Chief Executive Officer Edmund Clark said yesterday in an interview on Business News Network television. ``I think it's a great thing that the five Canadian banks are stopping talking about mergers, which I think is a distraction.''

To contact the reporter on this story: Sean B. Pasternak in Toronto at spasternak@bloomberg.net.

Last Updated: October 3, 2007 15:32 EDT