CANADA FINANCE-BMO open to U.S. growth as risks abate, CEO says

(This story is part of a special Reuters News package highlighting Canada's financial sector. For a complete listing of stories, click on [ID:nN19445229].)

* Sees better U.S. buying opportunities than 2 yrs ago

* Believes U.S. housing market approaching turnaround

* Sees provisions for bad loans at plateau through 2010

* Eyes capital market growth in munis, energy, mining (Repeats Reuters interview from June 2)

By Andrea Hopkins and Pav Jordan

TORONTO, June 2 (Reuters) - As Canada's profitable and proud Big Five banks eye opportunities amid the global financial carnage, Bank of Montreal's (BMO.TO) chief executive can already see how the nation's banks are carving up the pie.

"Fifteen years ago the Canadian banks had strategies that imitated each other. Today, you've seen a divergence of the banks' strategies. They are all different, and there's room for at least three of the five to be successful," CEO Bill Downe said in an interview on Tuesday at BMO's Toronto headquarters.

Such a tongue-in-cheek statement from the chief executive of Canada's fourth-largest bank belies the seriousness with which Downe takes BMO's mantra of customer relations and doing your homework as he carefully sizes up potential U.S. acquisitions to expand the bank's business.

While observers can easily categorize BMO's competitors according to their ambitions for growth -- Toronto-Dominion Bank (TD.TO) as a retail banker on the U.S. East Coast, Bank of Nova Scotia (BNS.TO) in emerging countries in Latin America and Asia, and Royal Bank of Canada (RY.TO) in global capital markets -- Downe is simply looking to strengthen BMO's reach across its core Canadian and U.S. Midwestern market.

If that means buying U.S. banks and insurers at a time when rivals worry about toxic assets and question the value of banks that have taken bailout money, Downe is willing to take BMO's substantial capital and do the deals.

"The ability to acquire properties at a price that will allow you to earn returns today is significantly better than it was 24 months ago," said Downe, noting the ability of U.S. financial institutions to tap equity markets in recent weeks is another encouraging sign that the sector is normalizing.

That's not to say 57-year-old Downe, who started at BMO in 1983 as a credit analyst, does not do his homework.

"We picked through hundreds of banks to buy the 16 banks that we bought, and tried not to buy three times book," he said of recent acquisitions.

NOTHING FLASHY

As you'd expect of Canadian banks, whose stodgy approach to risk ensured they were some of the biggest players left standing after the financial meltdown last year, BMO's U.S. shopping spree has never been flashy.