Ottawa should change tax regime to attract investment, Citibank Canada CEO says

The market implication is not “more growth” in the abstract; it is a potential re-rating of Canadian private capital formation if Ottawa actually compresses permitting timelines and lowers policy uncertainty. The first-order beneficiaries are capital-light financials and lenders with direct exposure to mid-market borrowers, but the second-order winners are domestic brokers, asset managers, and deal-adjacent advisers who monetize a higher turnover of M&A, project finance, and private credit. If approvals stay slow, the opportunity leaks abroad: founders incorporate elsewhere, projects get structured through U.S. entities, and the economic uplift accrues to non-Canadian intermediaries.

For CM, the real upside is not loan growth alone but mix: a faster pipeline of project finance, syndicated lending, and wealth/treasury flows tied to new investment activity. That said, the path is asymmetric—policy headlines can move sentiment in days, but capex and credit demand move in quarters, so the trade should be positioned for a 6-18 month lag. The main downside risk is that Ottawa announces incentives without execution, which can actually worsen capital allocation by prolonging uncertainty and freezing private commitments.

The contrarian view is that the current consensus may be underestimating how much of this is already priced into “Canada as cheap and neglected.” If the government over-delivers on incentives without simplifying approvals, it could subsidize low-return projects and pressure long-term fiscal credibility, which would be negative for banks via higher sovereign risk premia and for domestic rate-sensitive sectors via a weaker CAD. The cleanest tell will be whether large projects reach FID within 2-3 quarters; if not, the narrative becomes another false start rather than a durable growth regime shift.