Sept. 16 (Bloomberg) -- Canadian banks may step up acquisitions and investments in the U.S. as troubled lenders falter amid the economic slump.

“Significant opportunities” exist outside Canada in the next two to five years as banks restructure, Royal Bank of Canada President and Chief Executive Officer Gordon Nixon said today during a conference in Toronto sponsored by Scotia Capital. Other Canadian bank executives agreed, and Bank of Montreal President and CEO William Downe called this a “once in decades growth opportunity”.

Canadian lenders, which escaped the worst of the worldwide financial crisis, have excess capital that could be used for takeovers after spending the last year shoring up balance sheets beyond regulatory requirements.

Royal Bank will look at “a lot of options” in the U.S. when it comes to takeovers and investments, Nixon said, adding that he remains cautious and nothing will be immediate.

“To a large degree that’s going to be further out as restructuring happens in a more normalized market in the United States,” Nixon said. “And I still think that’s a long way away.”

Toronto-Dominion Bank, which has about as many branches in the U.S. as it does in Canada, will consider “strategic” acquisitions, Chief Financial Officer Colleen Johnston said. “We’re known for our very strong Canadian retail franchise, but we also believe there’s an enormous opportunity in the United States,” Johnston said.

Bank of Montreal, which owns the Chicago-based Harris Bank, expects opportunities to arise to buy troubled consumer banks in the “four or five states” around Chicago, Downe said in his presentation.

FDIC Talks

“I’m highly confident that there will be good deposit bases that can be acquired and high-quality branches,” he said.

The Toronto-based lender has been in talks with the Federal Deposit Insurance Corp., the U.S. bank regulator charged with finding buyers for institutions on the verge of collapse, in anticipation of deals.

“I’m optimistic that over the next 12 months that process is going to ramp up,” Downe said, adding that closures in the U.S. Midwest have been “relatively modest” so far.

Bank of Nova Scotia, which has operations in 50 countries, is looking at expansion in Chile, Jamaica, Mexico and other Nations where it already operates, President and CEO Richard Waugh said.

Opportunities in Canada

“We are confident we have chosen the right markets -- absolutely the right markets,” Waugh said in his presentation. “These markets will grow faster than developed markets over any period of time.”

Other banks are finding opportunities opening up within Canada as non-Canadian lenders retreat.

National Bank of Canada CEO Louis Vachon pointed to the recent offer to buy the National Hockey League’s Montreal Canadiens, which his Montreal-based bank helped finance after New York-based CIT Group Inc. pulled out of the deal in July.

“Maybe some of our foreign competitors will find their business model being questioned, and that will lead to some opportunities for us in the domestic market,” he said.

Canadian Western Bank, the Edmonton, Alberta-based lender with 85 consecutive quarters of profit, aims to double its assets in the next five years, President and CEO Larry Pollock said in his presentation.

“We’re looking to almost double the size of the bank, from about C$11.5 billion, C$12 billion today, to C$20 billion, double our net income after tax to C$200 million,” he said.

Canadian Western led the country’s banks higher, jumping 77 cents, or 4 percent, to C$20.22 at the 4:10 p.m. close of trading in Toronto Stock Exchange composite trading. National Bank climbed 78 cents, or 1.3 percent, to C$61.78, while Bank of Montreal was up 30 cents to C$53.15. Royal Bank rose 32 cents to C$57.27, Toronto-Dominion gained 23 cents to C$68.25 and Scotiabank increased 10 cents to C$48.60.

To contact the reporter on this story: Doug Alexander in Toronto at dalexander3@bloomberg.net; Sean B. Pasternak in Toronto at +1- spasternak@bloomberg.net

Last Updated: September 16, 2009 16:37 EDT