09w07:1 The Cdn Banks

by timothy. 0 Comments

What I remember seeing on the news a decade ago is the crowd at the corner of Bay and King with protest-signs, demanding that Chrétien’s government (through his Finance Minister Paul Martin) allow Canadian banks to merge. What I remember thinking was that this crowd was merely the office minions ordered out to the street by their superiors, and found it appalling. Chrétien and Martin turned them down. A decade later, this has worked out to our advantage. – Timothy

Worthwhile Canadian Initiative | Fareed Zakaria
“Canada has done more than survive this financial crisis. The country is positively thriving in it. Canadian banks are well capitalized and poised to take advantage of opportunities that American and European banks cannot seize. The Toronto Dominion Bank, for example, was the 15th-largest bank in North America one year ago. Now it is the fifth-largest. It hasn’t grown in size; the others have all shrunk. So what accounts for the genius of the Canadians? Common sense.”

Bank Mergers | The Council of Canadians
“In 1998, four of Canada’s biggest banks proposed to merge. The deals would have meant the loss of thousands of Canadian jobs and the closure of hundreds of local branches across the country. The Council launched a well-publicized cross-country campaign to convince federal Finance Minister Paul Martin to reject the proposed mergers and bring greater accountability to the banking industry. The Finance Minister ruled against the mergers on December 14, 1998.”

Canadian Bank Mergers Decision: Finance Minister Rejects Bank Merger Proposals: Dateline: 12/14/98
“It’s official. Canadian Finance Minister Paul Martin has rejected the proposed mergers of the Royal Bank with the Bank of Montreal and CIBC with the Toronto-Dominion Bank. […] The four banks have been using the line ‘the status quo is not acceptable’ to push their case for mergers. Martin has turned that around to say the status quo must be changed before bank mergers are considered. To that end, the government plans to develop a new policy framework for the financial sector in Canada. It will probably take at least a year. The new framework is expected to include a new review process for major bank merger proposals. It is likely the new process will require merger proposals to meet the same conditions though.”

The ‘new framework of above’ resulted in a 2003 report, in which the Progressive Conservatives (later enveloped by the Reform to become The Conservatives and Canada’s present government under Stephen Harper) argued that the Liberals should allow the mergers to go ahead:

Large Bank Mergers in Canada: Safeguarding the Public Interest for Canadians and Canadian Businesses: Report of the Standing Committee on Finance: Depoliticization of Bank Mergers Must Occur: Supplementary Opinion of the Progressive Conservative Party
Link March 2003
“The Progressive Conservative Party calls on the Liberal government to stop delaying and to stop playing politics with this very important issue; failing to do so will further disrupt the ability of Canada’s financial institutions to develop and execute sound business strategies that will allow them to grow and expand, creating opportunity and prosperity for Canadians. -Scott Brison, M.P. Progressive Conservative Finance Critic”

Postscript: Scott Brison is now a member of the Liberal Party.

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