INVESTMENT BANKING GROUP Group Description and Strategy 2002 Group Objectives and Achievements Maintain Canadian leadership in the high-return fee businesses of equity, debt, securitization, and mergers and acquisitions. Grow existing Harris Nesbitt franchise into a leading investment bank- ing franchise in the U.S. Midwest mid-market. Continue to develop the Credit Investment Management (CIM) business by increasing assets under management to US$15 billion, with a focus on high-grade asset structures. Leverage our merchant banking capabilities and expand our private equity investments. Continue to expand coverage of the media and communications and the energy sectors. 2003 Group Objectives Business Environment and Outlook Investment Banking Group operates in a rapidly consolidating and competitive financial services industry. Opportunities are less restrained by national borders, and success depends on the ability to provide transnational and integrated financial solutions. Difficult economic and credit conditions, partly attributable to concerns about corporate misconduct, created an extremely challenging business environment in 2002. Despite these chal- lenges, our group executed well across its core business activities. We remain cautious about the near-term environment as the current weakness in financial markets, depressed origination markets and a tentative credit environment are expected to  persist into 2003. Notwithstanding these challenges, the group remains well positioned for growth in North America and stands to benefit from any improvements in the market environment. The group expects Canadian economic growth of 3 $^{3}$⁄ $_{4}$% in 2003, u p from 3 $^{1}$⁄ $_{4}$% in 2002. 44 BMO FINANCIAL GROUP ANNUAL REPORT 2002 b Selectively expand into new products and trading strategies that relate to our areas of existing expertise. b Build further on our strengths in targeted high-growth sectors and markets. b Maintain a disciplined approach to cost and capital management. b Maintain Canadian leadership in the high-return fee businesses of equity, debt, securitization, and mergers and acquisitions. b Continue to build on the success of the Harris Nesbitt mid-market  franchise. b Established a nationally recognized food sector specialization in both cor- porate and investment banking. b Assets under management increased US$3 billion to US$13 billion, some- what below our objective because of the challenging credit environment. b Hired five new professionals. b Completed initial work to launch BMO Equity Partners Fund II. b Effectively integrated investment/corporate/merchant banking to offer total balance sheet solutions for growth capital in media and communications. b Energy group continued to provide an integrated offering with North American scope. b Aligned strong cash management capabilities well suited to mid-market clients. b Continued to leverage existing brand with full product offering. b Participated in 312 Canadian corporate debt and equity transactions, raising $50 billion. b Advised on more Canadian mergers and acquisitions than any other invest- ment bank, a total value of $14.2 billion.  b Ranked Top Overall Research Team in the Brendan Wood International  Survey of institutional investors for the 22nd consecutive year. We also ranked first, in the same survey, for Overall Quality of Sales Service and Overall Quality of Trader Service. b Ranked first in market share of Canadian equity block trading for the eighth straight year.  b Canadian Securitization unit ranked first in market share for asset-backed commercial paper conduit outstandings and term market issuance. It also ranked first in mortgage-backed and asset-backed securities trading for the seventh consecutive year. We offer clients complete financial solutions across the entire balance sheet, including treasury services, foreign exchange, trade finance, cash management, corporate lending, securitiza- tion, and public and private debt and equity underwriting. The group also offers leading financial advisory services in mergers and acquisitions and restructurings, while providing our investing clients with industry-leading research, sales and trading services. Our growth strategy is to build an integrated full-service,  mid-market North American investment bank, capitalizing on industry specialties and distinctive capabilities. Investment Banking Group (IBG) combines all of the businesses serving corporate, institutional and government clients across a broad range of industry sectors in Canada, with a North America- wide focus on the media and communications and the energy sectors. In the U.S. Midwest, the group serves mid-market clients under the Harris Nesbitt brand, and we specialize in the food and agribusiness sectors across the United States. IBG also serves institutional and government clients in the United Kingdom, Europe and Asia.