BMO Capital Markets will add the broker dealer’s 135 employees, who are spread across eight US offices. The expanded group will be led by BMO managing director and head of global trading products Kelsey Gunderson.
As the agency MBS market is the second largest US fixed income sector behind Treasuries, BMO approached the KGS acquisition as an opportunity to grow its capital markets footprint, according to Deland Kamanga, head of global fixed income, currencies and commodities at BMO.
“We are already a primary dealer in the US, and so it is natural for us to grow into two more areas of the bond market, which are MBS and ABS,” Kamanga told GlobalCapital.
Rather than expressing a particular view of the direction of US MBS and ABS, BMO looked at the KGS deal as a way to expand its suite of fixed income offerings to its investment banking clients. According to Kamanga, the expanded MBS offering will be key in serving Asian clients in particular, who have demonstrated a big appetite for long dated investment grade corporate bonds and US agency MBS.
“So while this complements our US growth plan, [the acquisition] also fits into our global strategy,” Kamanga said.