National Bank of Canada Chief Executive Officer Louis Vachon said Quebec must prove its economy can grow at the same rate as the country’s if it wants to improve a deteriorating business climate.
“The long-term consensus is that Quebec is condemned to grow slower than the rest of the country for the next 10 years,” Vachon, 51, said today at the Montreal-based firm’s annual meeting in Calgary. “It should be a priority for any Quebec government to prove the consensus wrong and to show that we can grow, at least at the Canadian average. And I think that’s feasible.”
Vachon said Quebec’s business environment has worsened in recent years for a variety of reasons. They include corruption scandals, investigations into the construction industry, student protests, efforts to boost mining royalties and a push by the Parti Quebecois government -- defeated in elections this week -- to ban the wearing of religious dress and headgear by state employees, he said.
“That’s taken about half of one percent of economic growth yearly out of Quebec,” Vachon said in an interview after the meeting. He predicted the province’s economy will grow 1.8 percent this year, up from his 1 percent estimate in 2013.
Quebec’s economy expanded by 1.5 percent in 2012, compared with a 1.7 percent growth rate in Canada, according to Statistics Canada data. The French-speaking province has seen economic growth outpace Canada’s only three times in the past 20 years, according to the government agency.
Quebec needs to restore confidence, improve social stability and put more emphasis on issues like mining royalties to draw business to the province and boost economic growth, Vachon said. The Quebec government should also tell companies they’re welcome to invest, he said.
“You don’t need to cut taxes, you don’t need to increase spending in the government, just stabilize things so we have long-term visibility and people will want to put money in Quebec,” Vachon said. “That’s should be the No. 1 priority.”
The province is undergoing a change in government after the Liberal Party under Philippe Couillard defeated incumbent separatist Parti Quebecois, led by Pauline Marois, in an April 7 election.
Vachon said he expects National Bank’s three main businesses -- personal and commercial, capital markets and wealth management -- to equally contribute to the firm’s growth. Canada’s sixth-largest lender by assets will probably expand by building from within, rather than through takeovers, he said.
“We will look at acquisitions, although I think it’s less likely,” Vachon said. ‘’The more obvious candidates, certainly in wealth management, have already been acquired.’’
The firm’s National Bank Financial unit is opening an office in Hong Kong this year focused on fixed income and Canadian equities, and a Dublin branch that will specialize in derivatives, Vachon said.
The CEO said he remains a “long-term bull” on Quebec. Over the past two years, he’s been “optimistic and constructive” on the province’s prospects, even when it wasn’t fashionable to have that opinion, he said.
“It’s fun to prove consensus wrong sometimes,” Vachon said.