News Stories on Bank Mergers From the Financial Post NDP Anti-Bank Merger Campaign YAHOO BANK MERGER COVERAGE Council of Canadians/CLC Anti-Bank Merger Campaign Canadian Federation of Independent Business (CFIB) Anti-Bank Merger page CBC National Feature on Bank Mergers Canadian Community Reinvestment Coalition is a coalition of over 100 anti-poverty, consumer, community economic development, labour and small business groups representing over three million people from every province and the Northwest Territories that advocates for bank accountability in Canada. NEWS STORIES 1999 Banks view airline merger with dismay Similar issues: Failure of bank proposal a bitter irony CIBC cuts 100 jobs in HR division More layoffs expected this month, bank sources say Bank of Montreal chops jobs, branches Blames Ottawa for rejecting mergers CIBC double-dings own customers Bank adds extra surcharge for clients using its non-brand ATMs CIBC plans major restructuring CIBC announced a massive restructuring plan Thursday, vowing to cut costs by $500 million over the next year-and-a-half. CIBC's new chairman, John Hunkin, said restructuring was a necessary first step in increasing the bank's stock price, improving customer service and regaining the bank's competitive edge in financial services. Earlier in the day it was announced revenue and profits were down at the CIBC. The bank reported a 30 per cent drop in earnings. Amex to compete with Canadian banks American Express announced Wednesday that it is moving into Canadian retail banking. Amex Bank of Canada has introduced a telephone savings deposit account it said will pay $400 a year more in interest on average than the big banks. The new savings account will be offered on a trial basis to a cross-section of the company's nearly two million credit card customers in Canada. "We can offer great value to our customers because we don't have to pay for branches, which is by far the biggest overhead cost of the big banks in Canada, which makes it more difficult for them to compete." Ottawa set to give banks more freedom Industry gaining ground Canada's big banks are gaining ground in persuading Paul Martin, the federal Finance Minister, to allow them greater freedom to operate in the marketplace. Sources say Mr. Martin is ready to accept a banking industry proposal for the creation of holding companies in the financial services industry. A holding company would allow banks and other financial services companies more flexibility in owning and operating distinct lines of businesses as subsidiary companies such as leasing, insurance, stock brokerage and credit cards. Post-merger blues as banks go to plan B Less money for changes Canada's major banks could have moved into the next century better equipped on all fronts had the federal government allowed the big players to merge, several leading industry insiders said yesterday. "The mergers would have provided the banks with more money to make changes much faster," John McCallum, senior vice-president and chief economist at Royal Bank of Canada, told the Canadian Economics Association's 33rd annual meeting at the University of Toronto. "But I suppose no means no, so now we have to go to plan B and devise plans for the non-merger world." Royal Bank's proposed takeover of Bank of Montreal and Canadian Imperial Bank of Commerce's merger with Toronto-Dominion Bank were blocked in December by Paul Martin, the federal Finance Minister. Ottawa to regulate bank closings Banks to give advanced notice as part of protection package, but government won't block branch closings Canadian banks will be required to give at least four months notice of branch closings as part of Finance Minister Paul Martin's overhaul of the financial services sector. The requirement will be part of a broader consumer protection package -- including greater privacy protection -- to be unveiled when Mr. Martin releases a policy paper on financial services reform next month. But the government will not introduce regulations to allow it to block branch closings, despite calls from consumer groups for a more interventionist approach. There are currently no federal regulations governing bank closings. Instead, banks use their own discretion, providing anywhere from one- to six-months notice depending on the circumstances. An internal Finance Department memo -- obtained under the Access to Information Act -- argues that Canadians in rural communities and inner-city neighborhoods have been hardest hit by bank branch closings. Citizens Bank puts ethics into banking As Canadian financial institutions await new federal regulations, Citizens Bank of Canada forges ahead with its own new standard of business conduct - an Ethical Policy which deals with such areas as human rights, tobacco and the environment. ``Last year, Canadians spoke up about their banks,'' said Citizens Bank CEO Linda Crompton. ``So, when 74 per cent of our members said their bank should have an ethical policy, we listened. Now, with the help of our members, we have set a new standard for corporate accountability in Canada.' Internet: http://www.citizensbank.ca Martin praises credit unions as alternative to big banks The federal government wants to encourage a stronger, national system of credit unions that offers consumers a vibrant alternative to the big banks, Finance Minister Paul Martin said Thursday. While he wouldn't give any details, he strongly hinted a paper due next month on legislative reform of the financial service sector will favour steps to strengthen credit unions. "I (have) said that there is value in having more, rather than less, choice," Martin told about 750 delegates representing credit unions from every province but Quebec, which has its own system. Wider powers will help poor, banks say Canada's banks are looking to the poor and the young for help in winning the right to sell insurance from their branches. The Canadian Bankers Association planned to release a poll Wednesday that indicates young and poor Canadians are less likely to object to picking up a brochure on insurance at their local banks - something that's currently illegal. But if you're a university graduate or more than 50 years old, you're more likely to object to a bank, trust company or credit union selling insurance. Of 2,026 Canadians polled by Decima Research in mid-March, almost 80 per cent had no objection to financial institutions making information available about insurance subsidiaries. But the results were highly polarized between income, age groups and regions of the country. No need for bank mergers: C.D. Howe Finding already disputed: Study shows no correlation between size and profitability Lobby war in full gear over banking powers The federal government finds itself in the middle of a nasty turf fight as the final touches go into a policy paper on who should do what in financial services. The association representing property and casualty insurance brokers across the country said Monday it is mobilizing its members in all 301 federal ridings to tell their MPs not to allow banks to sell insurance. Michael Toole, president of the Insurance Brokers Association of Canada, said his industry believes the banks are escalating their attempts to gain wider business powers to make up for being denied the right to merge last December. "The government should not cave in to this pressure," Toole said. "Our industry, which employs some 100,000 Canadians, cannot be offered to the banks as a consolation prize." Finance Minister Paul Martin is expected to meet departmental officials this week to begin work on a final draft of a paper outlining the government's legislative priorities for regulations governing banks, insurance companies, trusts and credit unions. Banks, Martin meet to discuss future of financial services Bankers go to Ottawa in first meeting after merger failure Bill it as Dawn of the Dead Mergers, maybe even as a grudge match in the Federation of Financial Heavyweights. Either way, Saturday's meeting between Canada's big bank bosses and federal Finance Minister Paul Martin in Ottawa is guaranteed to have more colour to it than your average bankers convention. At stake is the future of Canada's banks. Caught in the maelstrom of international consolidation, the banks are looking for Martin to loosen up banking regulations so Canada's big financial institutions don't get weaker as their global competitors get bigger and stronger. Mouvement Desjardins votes for major restructuring Members aim to make caisse more competitive with big six banks Ottawa may let provinces regulate banks Committee 'interested': May cover banks, trust firms, insurance, pensions Ottawa to look at TD-CIBC deal But action unlikely A Finance Department official in Ottawa said yesterday the government would take a closer look at the TD Bank-CIBC outsourcing deal that will result in 500 TD employees being cut loose. But he added he doubted anything would be done to stop the move. "On the face of it, it appears to be simply a strategic alliance . . . and not something that would cause the federal government to be involved in any way," he said. TD Bank sheds 500 jobs in contract with CIBC company About 500 TD Bank employees across the country will be cut loose after their jobs were contracted out to a company owned by rival Canadian Imperial Bank of Commerce. The jobs, mainly back-room work sorting bank machine and corporate deposits, will be farmed-out to a new company called Intria Items Inc. on a five-year contract. While most TD employees will be hired by Intria, some job cuts could result, the bank warned. Intria's parent company - Intria Corp. - is a wholly owned subsidiary of CIBC and is viewed as one of the leaders in the cash processing business. TD's move reflects the big banks' continued cost-cutting efforts and focus on core businesses in the wake of last year's failed bank merger bids. In the TD's case, the bank is putting its efforts into expanding discount brokerage and online banking services, where it can earn bigger returns. Bond rater cuts big banks' credit rating; merger guidelines promised Bank leaders focus on alternatives to mergers Rejection could result in layoffs and acquisitions Banking industry leaders are casting about for future strategies -- ranging from layoffs to strategic acquisitions -- as they brace for a possible rejection by Ottawa of their proposed mega-mergers. Canadians -- used to headlines about record profits at the Big Six banks -- may think things are better than okay, but bankers and financial analysts look to another leading indicator to measure success, and they don't like what they see. NEWS STORIES 1998 Competition report out Friday, but public may have to wait A pivotal report that could make or break proposed bank mergers will be sent to the proponents of the deals and to Finance Minister Paul Martin on Friday, but it�s not clear when the public will get a peek. The long-awaited Competition Bureau findings on the effects of two proposed mergers will be released to those directly involved after stock markets close Friday, officials say. But Martin aides aren�t saying when those conclusions, to be outlined in a letter to the merger proponents from bureau director Konrad von Finckenstein, will be made public. Martin may delay bank mergers Move would buy Ottawa time to outline revamping plan for financial sector, encouraging competition Finance Minister Paul Martin is considering rejecting the proposed bank mergers and ruling out any consideration of restructured deals until at least mid-1999. That would give the Liberal government time to outline its plans for a complete overhaul of the financial services sector to encourage competition and increase consumer protection, government and bank sources say. Banking association boss staying neutral on merger talk Canada�s top banking spokesman is urging the federal Liberals to think of consumers as they decide whether to allow a pair of bank mergers. But Raymond Protti, president of the Canadian Bankers Association, was otherwise wary Tuesday about taking a stand on whether the mergers are a good idea. Three big banks optimistic they can address bank merger fears Three of the country�s four merging banks appear optimistic they can address the concerns the federal Competition Bureau will throw at them in a report expected as soon as Friday. MPs say banks should be able to merge The powerful, Liberal-dominated Commons finance committee says banks should be allowed to merge if they demonstrate consumers would benefit. In a report to be released Thursday, the committee also says banks shouldn't get into the auto leasing business or sell insurance from their branches for now, sources say. Martin plans consumer protection Financial services changes intended to allay public concerns about bank mergers Bank mergers are dead, TD fears It expects a firm rejection from Martin, with no second chance The Toronto-Dominion Bank says it believes Finance Minister Paul Martin will never approve the proposed megamergers that would reshape Canada's banking industry. The TD, known as the most reluctant of the would-be merger banks, dropped the bombshell yesterday as its proposed partner, the Canadian Imperial Bank of Commerce, was announcing dismal year-end results. Bank merger partners looking for plan B With their controversial merger plans more tenuous than ever, Canadian bank executives are face to face with a hard question: Now what? "I don�t know the answer to that question," Toronto Dominion Bank spokeswoman Kym Robertson said Friday, after warning Thursday of fading hope for the bank�s merger with Canadian Imperial Bank of Commerce. Senate wades into bank mergers The Senate banking committee is recommending that Ottawa set up a formal review process for future bank merger proposals. In a carefully worded report released Wednesday, the committee said future merger proposals should continue to require government approval. But the report, supported by both Liberal and Conservative senators, said that there should be timetables to govern the approval process. Senate report suggests selloff by merged banks Canadian consumers will benefit from full competition in the financial sector only if the major chartered banks are forced to sell off large chunks of their branch networks as a condition of approval of their mergers, says a report released yesterday by the Senate banking committee. Without such divestitures, the report says, it would take at least three to five years to create strong competitors for the banks by building up the insurance industry, the credit union network, and making it easier for entrepreneurs to start small banks. Liberal members split on mergers Bickering in finance committee delays bank report Big banks face new merger obstacle Influential Senate committee to urge go-slow approach The influential Senate committee on banking will recommend next week that the federal government take a go-slow approach on the bank-merger front in order to allow sufficient time for new competitive forces to grow. The Citizen has learned that the committee, headed by influential Liberal insider Senator Michael Kirby, will endorse several major components of the key MacKay report on the future of financial services but that it differs in some significant areas. Can CIBC win on World Markets? If John Hunkin has his way, the bank will stick with his strategy and plough even more money into trying to become a top-flight North American investment house. When John Hunkin takes the podium Thursday morning at the Canadian Imperial Bank of Commerce board meeting, he is expected to present directors with the worst financial results his investment bank has ever turned in. Dismal capital markets have thrown a glaring spotlight on CIBC's high-risk expansion into the United States, most notably through the July, 1997, purchase of Wall Street brokerage Oppenheimer & Co., which Mr. Hunkin orchestrated. The future of Canada's largest bank by assets, and of the ambitious Mr. Hunkin -- who has his sights set on the chairman's seat -- hangs in the balance as the board focuses on the bank's ills. When CIBC closed the Oppenheimer deal, executives said they would need two good years in the markets to make it work. Today -- one year shy of that goal and coming out of a period of severe turbulence in the markets and inside CIBC Oppenheimer Corp. -- Mr. Hunkin faces serious questions about his strategy and the huge commitment of bank resources it has entailed. New national poll suggests Canadians oppose bank mergers by 2-1 A large majority of Canadians were opposed to bank mergers and thought shareholders and bank executives stand to gain the most from such deals, said a recent poll released Wednesday by a small business lobby group. Results of the survey conducted for the Canadian Federation of Independent Business come just as the banks are reporting record profits for fiscal 1998, an issue that often raises the hackles of Canadians. The poll by Environics Research found 60 per cent of respondents did not want Ottawa to allow the mergers of the type proposed between four of the country's five biggest banks. Support for the mergers at the time of the survey was 31 per cent, while nine per cent of those polled didn't express an opinion. Bank of Montreal hits record profits Canada�s banks continue to set earnings records, as Bank of Montreal did Tuesday, but their profit performance may be slipping. Bank of Montreal said it cleared $1.35 billion in the year ended Oct. 31. That was up 3.5 per cent from $1.3 billion in 1997 despite lower earnings in the final quarter caused by volatile stock markets. Royal's profit is biggest in Canadian history Royal Bank of Canada made a stunning $1.82-billion in fiscal 1998, the largest reported pure profit in Canadian history. The figure represents a 9 per cent increase from the Royal's $1.68-billion profit last year. Reform supports merging banks with conditions Banks seeking permission to merge got something they haven't seen in awhile Wednesday - support on Parliament Hill. The Reform party, after a prolonged silence, entered the debate on bank mergers and financial services reform by declaring that banks should have the right to merge like any other business. But the party also said bank mergers should wait until amending legislation has been passed to open up banking to more competition offered by foreign banks, an expanded credit-union system and other new players. "Open up competition and once that's in place, then we can look at the merits of any formal bank merger proposals," Reform banking critic Dick Harris told a news conference. Royal Bank to acquire British trust business Royal Bank is buying the offshore European corporate and institutional trust business of the Coutts Group, the international private banking arm of NatWest Group of Britain. Coutts administers about $10.4 billion Cdn in assets in Jersey, Guernsey and the Isle of Man on behalf of corporate and institutional clients, based predominantly in Europe and Asia. Banks dangle a big carrot; people figure it must be rotten Royal, Montreal promise to slash service charges if merger approved Merging banks take their case to the public The Royal Bank and Bank of Montreal took their case for a merger directly to the public Tuesday after last week's rebuff from the government caucus. Matthew Barrett, chairman of the Bank of Montreal, said in an interview the banks' message has been drowned out in the highly contentious debate, particularly in Ottawa, on whether a 31-year general ban against bank mergers should be ended. Canada's bank mergers players are all aboard a gravy train Pollsters and strategists, lobbyists, lawyers and legislators all have their billable meters running As public monuments go, the bank mergers must rank right up there with the pyramids. The egos of the modern-day corporate pharaohs are just as large, but this time there's no slave labour involved. Since the first fiduciary edifice was announced in January by Royal Bank of Canada and Bank of Montreal followed in April by Toronto-Dominion Bank and Canadian Imperial Bank of Commerce, the number of bankerly bodies, strategist person-days and lawyers' billable hours has run amok. Banks expect a 'No' to mergers Some bankers appear to be increasingly convinced that their merger plans will be rejected by Finance Minister Paul Martin and are looking for a second chance to make their case, the Toronto Star reported Thursday. "I think we can safely assume it won�t be a Yes," one Toronto executive at a bank involved in a merger told the paper. "He�s going to have to say no. We all know that," another unnamed executive told the Star. While the banks officially say they expect the merger proposals to be approved, behind the scenes they are hoping for another chance to revise their plans. Banks in uproar over task-force report 'We got pepper-sprayed': Merger issue promises to become major campaign Inside the bank towers, shock quickly turned to anger yesterday after a Liberal caucus task force gave a resounding rejection to two proposed bank mergers. "We got pepper sprayed,'' barked angry bank official who asked not to be named. "This came a day after a Liberal caucus committee of 54 backbench MPs tabled their report urging Finance Minister Paul Martin to say no to the mergers. Soundness of bank system to be focus of watchdog Merger report to key on possibility of failures The country's top financial watchdog will raise concerns about the effect on the soundness of the banking system if the two proposed mergers are allowed, but he will not give either deal a red or green light. John Palmer, the superintendent of financial institutions, is due to report at the end of the month to Finance Minister Paul Martin on the proposed mergers between Royal Bank of Canada and Bank of Montreal,and between Canadian Imperial Bank of Commerce and Toronto-Dominion Bank. Merged Bank Will Do More to Serve Remote Areas of Canada, says Aboriginal Leader A merger between Bank of Montreal and Royal Bank will create a new bank that can do more to serve the needs of the thousands of Canadians in remote and rural parts of the country, according to Ron Jamieson, Senior Vice-President, Aboriginal Banking, Bank of Montreal. ``Bank of Montreal and Royal Bank both have long traditions of being frontier banks,'' Mr. Jamieson told the House of Commons Finance Committee. ``Both of us are strongly committed to Aboriginal banking.'' President tells Senate Committee: More Alternatives Required in Small Business Financing BDC Ready to Play a Greater Role The President and CEO of the Business Development Bank of Canada (BDC), Fran�ois Beaudoin, today told the Standing Senate Committee on Banking, Trade and Commerce that small businesses across the country feel that access to financing is restricted by the limited number of sources in the marketplace. Changes to Canada's financial sector require thorough review process, according to Scotiabank Vice-Chairman Any changes to the financial sector should go through a thorough review process designed to strengthen and build upon Canada's current financial system, according to Robert Chisholm, Scotiabank Vice-Chairman. ``In developing policies to set the future direction of Canada's financial sector, the primary aim of government must be to maintain and build upon the great strengths of our current system. This is particularly important today, with profound global unrest and uncertainty,'' Chisholm told the Halifax Chamber of Commerce. Chisholm feels that a safe and stable banking system is key as the country faces the worst global financial crisis in 50 years. Liberal MPs line up against bank mergers Fifty-four Liberal MPs who say the big banks are short-changing consumers in their merger plans urged the government Wednesday to reject the proposals.. But Tony Ianno, chairman of a Liberal caucus task force investigating two proposed mergers, left the government an opening to approve one or both of them, saying there may be information backbenchers didn�t have. Bank officials said they�ll continue to seek approval from Ottawa despite the opposition of at least a third of the government caucus. Watchdog worries about undesirables running banks Making Ottawa�s banking watchdogs encourage more competition in financial services could lead to undesirables running financial institutions, the head watchdog complained Thursday. Speaking to the Commons finance committee, John Palmer said he has nothing against competition and innovation. They�re just not his department. Nor should they be, the federal superintendent of financial institutions said. Liberal task force won't support bank mergers Martin to have final say: Report says banks didn't make case that bigger is better Thiessen warns of new risks to financial system The price of increased competition and flexibility in the financial system is the increased likelihood of institutions collapsing, Bank of Canada Governor Gordon Thiessen warned Tuesday night. Thiessen told the Commons finance committee that recommendations of last month's federal task force on financial services policy that call for more competition and greater organizational flexibility are worth considering. But the governor also told MPs of all parties not to forget the need to strengthen regulatory measures such as disclosure standards to reduce the likelihood of financial institutions failing as the system becomes more competitive. "It is possible that with ... new entrants and the greater organizational flexibility being proposed, there could be an increased likelihood of failure of regulated financial institutions," he said. Senate committee hears submissions on bank mergers Ottawa should not approve the merger of chartered banks without first making sure retailers have access to competitive financial services, a Senate committee on banking was told Tuesday. Representatives from the Retail Council of Canada told the committee its members have serious concerns about proposed mergers between the Royal Bank and the Bank of Montreal, as well as Toronto Dominion and CIBC. Use discretion on foreign bank entry: CIBC chairman The federal government should continue to maintain discretion over how much of the banking market will be held by foreign institutions, CIBC chairman Al Flood said Monday. Speaking to the Commons finance committee, Flood said domestic control of a country�s banking industry is an important instrument of national policy. It is doubtful, he said, whether his bank would be able to buy control of a large U.S. bank even though American authorities are less inhibited by mergers in the industry. Senate banking committee urged to fast-track overhaul Finance Minister Paul Martin should act quickly on parts of the MacKay task force report and then define detailed rules for Canadian banking in his budget early next year, Laurentian Bank of Canada president Henri-Paul Rousseau said yesterday. He told the Senate banking committee public hearings on the MacKay report that fast-tracking the banking overhaul is vital to avoid the issues being lost in a morass of debate. Credit unions catch merger fever---VanCity proposes creating Canada's first member-owned bank Bob Quart wasn't expecting such a warm reception for his idea from members of the Senate banking committee when he addressed its members Oct. 8. Then again, he hadn't counted on the growing anti-bank sentiment on Parliament Hill. Quart runs Vancouver City Savings Credit Union, Canada's largest credit union, with $6.2 billion in assets, 43 branches in the lower mainland and 255,000 owner members. Numbers like that, in his view, make his institution a pipsqueak. "We pioneered daily interest savings bonds, open mortgages and the first ethical mutual fund. But the banks just take our ideas and implement them across their huge national networks," he said. "With their cost advantages, they have the power to some day put us out of business. I should know. I fight them head-on every day." Quart's proposal to Senator Michael Kirby's committee shows he has been infected with the merger fever that has overtaken Canada's Big Five banks -- or at least the four that have announced plans to merge. Scotiabank boss continues anti-merger campaign The fact that the smallest of Canada's big five banks are recognized as the most efficient shoots holes in claims that bigger is better, Scotiabank chairman Peter Godsoe said Tuesday. "If efficiency gains are possible, why haven't the larger banks in Canada proven to be much more efficient than Scotia and TD who are about two-thirds their size domestically?" Godsoe asked a luncheon meeting of the Canadian Club in Winnipeg. Banks unveil e-billing plan to compete with post office Five of Canada's largest financial institutions said yesterday they'll go head to head with Canada Post and a Bank of Montreal subsidiary in a race to develop the country's first system to deliver bills electronically. Canada Trust, Canadian Imperial Bank of Commerce, Royal Bank of Canada, Toronto Dominion Bank and National Bank of Canada will test a system next year that will send customers bills through home computers via the Internet or through proprietary software. If successful, it would be a direct challenge to a Canada Post, B of M initiative announced four months ago to create a national computer-based mail system. Barrett says bank can't wait forever Bank of Montreal chairman Matthew Barrett says he can�t wait much past spring for Ottawa to approve a merger with the Royal Bank. "I can�t keep putting it on hold indefinitely - an extended delay would be equivalent to a No," Barrett said in an interview Thursday. Amex Bank wants Canadian probe launched into credit card monopoly Amex Bank of Canada said yesterday it wants Ottawa to follow the lead of the U.S. Justice Department by probing the exclusive arrangements Visa and MasterCard have with banks. Attorney General Janet Reno said Wednesday she is suing Visa USA Inc. and MasterCard International Inc. because the two credit card companies have prevented U.S. banks from offering any other credit card. In addition, she said, because U.S. banks can offer both of the two popular cards, there is little incentive from them to be competitive. Amex Bank of Canada said the timing of the U.S. lawsuit could give Ottawa's Competition Bureau "food for thought" in its probe of Canada's bank mergers. Merged banks 'should be forced to sell assets' he merger of Canadian banks should be accompanied by a major divestiture of assets and customers, Ed Clark, president and chief executive of Canada Trust, told the Senate banking committee yesterday. He said Canada Trust would be a buyer of whole lines of bank activities, such as credit cards, brokerage houses and branch networks if such a divestiture policy was put in place, adding he knows of other companies that would participate as well. Godsoe labels megabanks a 'high risk' strategy Canada would be pursuing a high risk strategy by having one or two global scale banks, Bank of Nova Scotia chairman Peter Godsoe told the Senate banking committee yesterday. There is growing evidence in the fallout from the Asian financial crisis of the risk of one or two national champions in the financial services industry, Godsoe said. He added if one institution fails the result would be catastrophic for the domestic economy. In outlining his opposition to the proposed mergers of Royal Bank of Canada with Bank of Montreal and Toronto Dominion Bank with Canadian Imperial Bank of Commerce, Godsoe said the mergers would result in overwhelming economic concentration. BC General Insurance Brokers to Finance Committee: Banks Are Big Enough BC insurance brokers told the Finance Committee today in Vancouver that Canada's banks are big enough and should not be granted additional special insurance sales privileges over and above what the current laws allow. Insurance Brokers Association President Michael Megson told the Committee that ``the MacKay Task Force has patently ignored consumer opinion in proposing to grant banks additional insurance sales privileges'' and he urged that current laws prohibiting bank branch insurance sales be maintained to protect consumers. Size doesn't necessarily matter, banking committee says It takes more than size to build a world-class bank, says the Senate banking committee. In a report on regulatory issues, the committee said Thursday it found no evidence a bank must be big in its domestic or home market to be successful in global markets. The senators cited the case of Japanese banks, at one time world leaders, which are now struggling to survive the Asian financial crisis. "Their size did not guarantee success," the report said. The Royal Bank and the Bank of Montreal have argued they should be allowed to merge because "size matters" if Canadian banks are to continue to thrive in a globalized economy. The senators, however, also found that size isn't necessarily a bad thing either. "Size does provide the large capital base that is necessary for global success, even if it does not guarantee that success," the report said. As for the question of whether mega-banks are able to create cost efficiencies that can be passed on to their customers, the senators said they found inconclusive evidence. Proposed bank mergers would whallop Saskatchewan: Scotiabank Two proposed bank megamergers would sweep through Saskatchewan like a Prairie brush fire, leaving unemployment and boarded-up bank branches in their wake, warns the Bank of Nova Scotia. Up to 500 jobs could be lost in the province and almost 50 branches closed if the mergers are approved, Robert Chisholm, vice-chairman of Scotiabank, said Wednesday. Royal and Bank of Montreal plan to merge, as do CIBC and TD Bank. The banks have suggested they'll try to deal with job losses that result from their mergers through attrition. They also say they expect within about five years of the mergers, their payrolls will be bigger as they expand into other lines of business. But the mergers will actually reduce competition and choice for Canadians, Chisholm said in a speech to the Regina Chamber of Commerce. A copy of his speech was released in advance of delivery. A number of veteran Canadian bank analysts have turned bearish on prospects that two megamergers proposed by four of Canada's biggest banks will win government approval. Speaking on condition of anonymity, several analysts said the deals appear to facing a growing wave of political opposition. While they still believe the deals could pass, they said the odds appear to be worse than they were just a few months ago. Insurance brokers criticize bank report Allowing Canada's big banks to sell property and casualty insurance would kill jobs and hurt consumers, a group representing independent insurance brokers told the Commons finance committee Wednesday. Michael Toole, president of the Insurance Brokers Association of Canada, said the recent MacKay task force report on the future of financial institutions simply failed to fulfill its mandate by recommending such a move. Ottawa bans tied selling by banks Bank Act changes don't hit other financial institutions The federal government is banning the practice of tied selling by banks, a controversial sales tool that has long been the bane of consumers. The new law, which takes effect today, comes just two weeks after a federal task force on financial services recommended that the coercive practice be banned in all financial institutions. The amendment to the Bank Act was introduced in 1997 but fierce opposition from the banks made its adoption far from certain. It will be proclaimed into law today. MacKay report angers auto dealers The automobile industry tore a strip off the MacKay task force report on the future of financial institutions yesterday, angered by the renewed possibility of Canada's banks entering the retail vehicle leasing business. The task force "comes clearly from a pro-bank perspective that argues that our banks should be allowed into every business that they want to get into," the Canadian Automobile Dealers Association said in its submission to the House of Commons finance committee. Fixing banks key to stable globe, Martin says Toughening the rules of banking and other financial transactions is a key step toward preventing collapse of the world economy, Finance Minister Paul Martin said Monday. Just as domestic economies have long needed strong supervision of their financial institutions, global economies also need such protections, he said. "To ignore this fact allows an international model that has all the market freedoms of our national economies, but not its protections." Martin made the comments at a news conference held before 48 Commonwealth finance ministers begin meeting here this week. Senate committee begins hearings on financial sector There�s more to restructuring financial services than bank mergers and Canadians must put their prejudices aside to decide what�s best for the country and consumers, says the head of a task force on the subject. Harold MacKay and other task force members were first to appear before the Senate banking committee�s hearings Monday on changing the financial industry. The issue of whether banks should be allowed to merge has eclipsed other aspects of the debate, says MacKay, including other options recommended to help financial institutions deal with growing competition. "Mergers can be a valid business strategy, but they are only one strategy among many," he told senators. Banks wrap themselves in the flag The next stage in the battle to win the hearts and minds of Canadians in the big bank merger push is about to unfold, with Bank of Montreal arguing the combinations are in the national interest, says Matthew Barrett, the bank's chairman. Barrett says consumers will suffer without mergers The chairman of one of Canada�s biggest banks says jobs will be lost, branches closed and services reduced if banks aren�t allowed to merge. "I as a businessman believe that the industry has to become more efficient or risk withering on the vine," Matthew Barrett of the Bank of Montreal said Friday after testifying before the Commons finance committee. He said if mergers aren�t approved "it is inescapable that there will be a reduction in employment and branches." (can you say 'economic blackmail'? .EP) Banks could turn to alliances, other strategies As rumours swirl around the question of whether the bank mega-mergers will be approved, talk is turning towards Plan B - what they�ll do if the federal government rejects their plans. At least two banks - the Royal and Bank of Montreal - paint a bleak picture of what will happen if their No. 1 strategy fails, while another won�t discuss a back-up plan. TD shareholders get cold feet about merger Some Toronto-Dominion Bank shareholders are getting cold feet about the proposed merger with the Canadian Imperial Bank of Commerce, saying it is much less attractive because of problems at CIBC and worries over how long a deal might take to consummate. The chasm between the two banks' stock prices has widened substantially since their deal was announced in April. Both analysts and institutional shareholders are suggesting that if the share prices continue to diverge, TD ought to renegotiate so its shareholders get a better shake. Bank of Montreal chairman denounces opponents to bank mergers Competitors who are trying to derail the Bank of Montreal's proposed merger with the Royal Bank are abusing democracy, chairman Matthew Barrett said Thursday. In a speech to the Canadian Club, Barrett said that trying to use the political process to halt the megamerger "is not respectful of the market economy. Still less is it a democracy. Barrett prepared to be patient � but not for long Bank of Montreal chief may reconsider merger with Royal Bank if approval delayed Banks need legal dispensation The Royal Bank will require dispensation from the federal Competition Act if it asked to provide the fullest possible information in any public merger review process, a bank executive said Tuesday. David Moorcroft, vice-president of public affairs at the Royal, said his bank and the Bank of Montreal would risk collusion charges under the Competition Act if the two institutions were to discuss in detail each other�s marketing and pricing strategies. MacKay says the public, not banks, comes first Bank mergers should not be allowed if they compromise the interests of ordinary Canadians, the chairman of a federal task force on financial services reform said yesterday "In a case of conflict," Harold MacKay said in his first major speech since the task force report was released in Ottawa last week, "the public interest trumps the private interest." MacKay told a Toronto business audience financial institutions should move quickly to ensure all Canadians have access to basic banking services. "If real progress is not made soon, we recommend that governments legislate." Banks need legal dispensation OTTAWA (CP) - The Royal Bank will require dispensation from the federal Competition Act if it asked to provide the fullest possible information in any public merger review process, a bank executive said Tuesday. David Moorcroft, vice-president of public affairs at the Royal, said his bank and the Bank of Montreal would risk collusion charges under the Competition Act if the two institutions were to discuss in detail each other�s marketing and pricing strategies. Bank reform urgent but government correct to consult: MacKay Although his task force urged quick action to tune up Canada�s financial services industry, Harold MacKay says he�s not worried the government will get bogged down over two proposed bank mergers. Parlimentary reviews of the planned mergers, coinciding with probes by federal regulators, means it could be well into next year before Ottawa makes any decision on the proposed deals. And the government�s actions will send a signal as to its intentions towards bank mergers generally. But MacKay said Tuesday he doesn�t think the reviews amount to unnecessary delays in updating regulations governing the industry. Activist wants banks to end political contributions Investor activist Yves Michaud yesterday started a new lobbying campaign to end the practice of bank contributions to Canadian political parties. "It is immoral and indecent that the members of the board of directors of the bank use shareholder money to promote their personal political opinions and candidates �money that does not belong to them," said Michaud. He said he formally asked Canada's six largest banks last week to include a proposition calling for an end to the "undemocratic practice" on their agendas for next year's annual meetings. Despite initial opposition, Michaud succeeded in forcing Canada's largest banks to put governance issues to a shareholder vote at annual meetings this year. Royal Bank tries wooing skeptical MPs Royal Bank of Canada chairman John Cleghorn sought yesterday to assure skeptical MPs that bank mega-mergers won't result in huge job losses and poorer service to customers. At a hearing of the all-party Commons finance committee, Mr. Cleghorn said that Canadians would see benefits from the mergers through lower prices and more aggressive lending to small business. Is new TD-CIBC deal cooking? Last spring, the kitchen table at Al Flood's house carried a load when CIBC's chairman and chief executive officer put it to use as the site of secret merger talks with Charlie Baillie, his opposite number at Toronto-Dominion Bank. The table may be called upon again, as this union looks like it requires additional work if it is ever to come to pass. There are three strong signals that all is not well with CIBC's proposed marriage to TD: The rumour mill, the market and the two CEOs' comments. Royal Bank chief agrees to more competition The chairman of the Royal Bank supported giving his competitors more business powers Monday while continuing to campaign for the right to merge. John Cleghorn also pledged support for something the banking industry opposed when it was first proposed on Parliament Hill two years ago - yearly accountability statements on a bank's lending and service to individual communities. Cleghorn, who wants to merge his bank with the Bank of Montreal, was appearing before the Commons finance committee to review last week's federal task force report on financial services and talk a little merger. TD buys British brokerage Toronto Dominion Bank paid about $20 million for the privately owned regional brokerage, based in Manchester, said TD's vice-chairman Duncan Gibson. While it is not one of the largest discounters in England, Gall & Eke is "not a smallish one," Gibson said, given that the discount brokerage industry is not well developed in England compared with North America. MPs and senators get to debate MacKay The hot potato of bank mergers and financial industry reform is set to pass on Monday to the politicians. They face the task of sorting out some of the confusing issues raised by the MacKay task force's report on the future of financial institutions. One of the report's key recommendations � that the proposed bank mergers be subjected to a final public review � is already causing consternation among bankers who feel they may be in a catch-22 situation. Spotty record for U.S. bank mergers OTTAWA (CP) - Some of the biggest banking names in the world may be involved in a merger, but that doesn't mean it will work. That's the lesson from hundreds of American mergers that Canadian policy makers are considering as they contemplate two proposed mergers involving four of Canada's Big Six banks. The U.S. Federal Reserve Board looked at the operating performance of 19 bank mergers between 1990 and 1993 and concluded that only six showed improvement in profitability and efficiency. Bank chief says considering written guarantees on jobs The Royal Bank and Bank of Montreal are considering offering written guarantees that job cuts would be made by attrition only if the two banks are allowed to merge. They may also offer service charge reductions, Royal chief economist John McCallum told CTV's Sunday Edition. Bank mergers could kill Toronto jobs: bank study Two proposed bank megamergers could slash 24,000 jobs in Toronto, the nerve centre of Canada's banking industry, says a new study. Because it will be hit hard, Canada's largest city should support calls for a comprehensive public interest review of the planned mergers, says Warren Jestin, chief economist of Scotiabank. Citigroup confirms that job cuts of 8,000 are possible A Citicorp spokesman said Thursday that the bank's merger with Travellers Corp. could lead to job cuts as the two companies deal with overlapping responsibilities. Richard Howe said cuts of about five per cent of two companies' combined workforce of 160,000, or about 8,000, are possible by the end of the year. That figure would include the 7,500 jobs that Citicorp had announced last fall. The merger was announced in April. More hearings ordered on bank mergers Finance Minister Paul Martin has decided to hold back a decision on two proposed bank mergers until well into next year. Government officials confirmed Wednesday that Martin will order special hearings of the Commons finance committee beyond those already set to begin next week on the MacKay task force report on financial institutions. As a result, bankers lobbying for a speedy decision on their merger plans will be cooling their heels for some time, possibly until May. Task force suggestions shouldn't scuttle merger:CIBC The MacKay task force has taken a strong consumer slant, but that doesn't mean regulators will impose such tough conditions that the proposed merger between CIBC and TD will be threated, says the chairman of Canadian Imperial Bank of Commerce. The federal task force, which released its report on the future of financial services Tuesday, emphasized consumer interests, Al Flood said in an interview. Banks complain proposed rules too cumbersome Proposals for sweeping new consumer protection rules could prove overly costly and burdensome, two top bankers warned Wednesday in their first show of resistance to proposals from the federal task force on financial services. "The fear is that this could go on forever and we could employ most of our staff complying with regulations," said Toronto Dominion Bank chairman Charles Baillie. Banks given cautious go-ahead Complete Report From Edmonton Journal With Links Canadians worried about a future dominated by banking behemoths saw their fears eased Tuesday by the long-awaited arrival of the MacKay task force report on the financial services sector. The report envisions a future in which there will be more -- not fewer -- banks offering more -- not fewer -- services, including car leasing and insurance. Some new banks will be bigger, the result of mega-mergers, while others will be smaller, new entrants into a more open and less regulated industry. Auto industry disappointed in task force report Car dealer James Gibson says customers leasing cars often think they're paying too much but giving banks a piece of the market, as a task force recommended Tuesday, isn't likely to help things. The general sales manager at Carleton Place Dodge Chrysler Inc. says part of the problem is there are too many middlemen in the leasing business and adding more players would make things worse because they all have to make a profit. Banking sector report issued Monday Newsmaker: Harold MacKay When the federal government turned to Harold MacKay to take over its task force on financial services 14 months ago, few people on Bay Street knew anything about the Regina lawyer. But to knowing eyes inside the Liberal party, the government was calling in an old pro and political fixer to pick up the pieces after the messy resignation of James Baillie as task force chairman. Proposed mergers will hurt consumers, small business: Scotiabank Consumers, small business and rural Canadians will suffer and the country's financial sector will be damaged if two proposed bank mergers are approved, one of the Big Five bank chairmen said Monday. There will be no long-term consumer benefits and business will have fewer financing choices if four of Canada's biggest banks are allowed to merge into two, warned Peter Godsoe, chairman of the defiantly spinster Bank of Nova Scotia. Bank rebuts competitor's claims A report by Scotiabank about the concentration that would result from mergers in Canada's financial services industry is misleading, a top Bank of Montreal economist says. Bank mergers would create unprecedented concentration, says study If two proposed bank mergers are approved, Canadians would see the highest level of concentration of bank lending among the major industrialized countries, says a new report by a rival institution. The two new megabanks would account for 66 cent of Canada's homegrown banking assets - essentially loans - says the study released Friday by the Bank of Nova Scotia's economics department. Bank mergers run into opposition Sweeteners from bankers to make mergers go down easier ran into a backlash Friday from groups that don't believe big bank unions are good for Canadians. For weeks, four banks seeking federal permission to merge have been busy with campaigns to reassure Canadians that job losses would be minimal and consumers would gain through improved services and lower costs.Now a coalition of interest groups, ranging from the Canadian Labour Congress to the National Anti-Poverty Organization, plan a counter campaign. Duff Conacher, head of Democracy Watch, an Ottawa watchdog group, said the coalition plans speaking events over the next three months in most cities where bankers have been. MERGER MANIA Balancing the banks How do you reconcile global pressures on growth-hungry banks with a public that's convinced they're already too big? Finance Minister Paul Martin hopes next week's task-force report will show the way. Ottawa retiree Bettye Hyde moved her banking business to the Royal Bank of Canada's Beechwood Avenue branch last year because it was convenient and "friendly to seniors." Less than a year later, the Royal Bank announced it would be closing the branch. When she complained, the 80-year-old woman got a lecture on banking economics for the new millennium: More and more customers are embracing electronic banking, she was told, making low-traffic branches such as hers uneconomical. Task force to recommend ending ban on bank mergers The federal task force on the future of the financial services industry will recommend the government drop its ban on bank mergers as long as measures are taken to protect consumers, the Globe and Mail and Financial Post reported Thursday. The report, which is expected to be released Tuesday, does not give Finance Minister Paul Martin any direction on whether he should or should not approve the proposed mergers of the Royal and Bank of Montreal or Toronto Dominion and CIBC, the papers said. Merger if necessary, but not necessarily merger Think of King Solomon when considering the result of Harold MacKay's mission to impart wisdom about bank mergers. Except that instead of being asked to appease just two competing parties, the MacKay task force tried to carve out a compromise to satisfy many competing interests - the federal government, Canadian consumers, banks and bank employees. Among details that have leaked out about MacKay's report, due for release Tuesday, is a recommendation that Ottawa end its 34-year-old moratorium against bank mergers. Banks keep upping ante as merger decision approaches After a quick e-mail from home to fine-tune your mutual fund portfolio, swing by the grocery store for some fresh veggies and, while you're there, arrange to lease a new sport utility vehicle. Before returning home, wheel into a small business boutique bank for a congenial chat with the manager about expanding that line of credit. Banks insist mergers give them a fighting chance against big competitors With more foreign competitors nipping at their market share, merger-hungry Canadian banks are insisting they must be allowed to expand through unions if they're to survive as viable homegrown businesses. The banks' arguments, wrapped in the Canadian flag, aren't new. But they're gaining impetus as Ottawa turns its attention once again to the issue - and as more rivals appear on the scene. This week Banc One Corp., a major U.S. financial services company, jumped into the Canadian market offering Visa credit cards through a subsidiary company operating in Ottawa and Toronto. New merged bank would be small-business friendly - bank chairman CALGARY (CP) - Canada's proposed banking behemoth that would be formed through the merger of the Bank of Montreal and Royal Bank wouldn't run roughshod over small business, Matthew Barrett said Thursday. Barrett, chairman of the Bank of Montreal, spent the day selling the merger in the business-friendly oil and gas capital of Canada. He began his day by helping to open a mini-branch at a Canada Safeway grocery store and then pitched the proposed merger to an invitation-only business luncheon crowd of more than 300. Bank of Montreal and Canada Safeway team up on in-store branches Attention! Safeway shoppers, there's a 10-minute special on mortgages in aisle 12. The Bank of Montreal is expanding its banking network to Canada Safeway Ltd. grocery stores in Western Canada. So shoppers will be able to find mortgages next to the mangoes and GICs piled up by the green peppers. "You'll see much more of this as we distribute branches out of big brick and mortar and distribute them to where people shop," said bank chairman Matthew Barrett, standing just a few metres from stacks of fresh produce. "We realize we have to go where our customers want us, we have to simplify their lives. We have to provide them access that's easy for them and not just what's convenient for us." The big bank and Safeway announced they will open a total of 100 bank branches in grocery stores in Alberta, British Columbia, Manitoba and northwestern Ontario over the next four years. CIBC boss warns Ottawa: No `onerous conditions' on merger Says shareholders will reject deal with TD if regulators make it unprofitable Canadian Imperial Bank of Commerce shareholders would likely reject the proposed merger with Toronto-Dominion Bank if the government places too many costly conditions on the deal, the bank's chairman said yesterday. In an interview, CIBC chairman Al Flood said that while the merger needs the approval of Finance Minister Paul Martin, the bank's shareholders will have the final say. Status quo not on if bank mergers fail: Bank of Montreal Canadians shouldn't assume it will be business as usual at the country's big banks if their merger plans are rejected by federal authorities, the chief economist of Bank of Montreal warned Tuesday. Intense competition and growing costs of technology could force the banks to cut services, becoming niche players that specialize in a few areas such as mortgages or credit cards, if the mergers are turned down, Tim O'Neill told a news conference. Study says consumers will save through bank mergers Canadian bank customers could save more than $1,000 each over the course of a decade if Ottawa approves two proposed bank mergers, says a study released Tuesday by the Fraser Institute. The mergers, proposed by Royal Bank with Bank of Montreal and CIBC with Toronto-Dominion Bank, will lead to dramatic cuts in the number of branches and that could ultimately slash their expenses by between $29 billion and $88 billion over 10 years, according to the report by the Vancouver-based conservative think-tank. Banks leery about student loan programs, want change July 31 Bank mergers threaten small-business loans, group warns July 30 OSFI drafts accounting rule change for mergers July 23 Could put Canada, U.S. banks on equal footing Dollar's dive a boon for banks July 20 A volatile loonie adds up to record 6-month profits for currency traders Canada will weather the Asian financial crisis better than most -- Martin July 18 Consumers need bigger banks through mergers, Cleghorn says July 18 (Banks blame the victim . ed) INTERVIEW-Royal Bank CEO targets U.S. expansion July 17 Banks escape debate on mega-mergers July 16 Consumers will be crucial when considering bank mergers: Martin July 16 Banks' merger argument rejected July 16 Banks' merger argument rejected Watchdog's guidelines to probe mega-merger Credit unions mull banding togetherJuly 14 Committee leader envisages standard services and products across country and also see FP: Credit unions eye 'bank' Independent organizations consider banding together to form $47-billion financial powerhouse that would preserve movement's small-town roots Odd bedfellows in Canada's banks July 10 The strategy now in vogue at Canada's major banks and their investment dealer subsidiaries is to combine the ranks of corporate bankers -- who make loans to clients and traditionally work in banks -- with the deal-making investment bankers who labour at the brokerage houses. CEOs benefit the most -- pollster (well duh. ed) July 10 The Canadian economy may be on the rebound, but it's the chief executives and senior managers who are benefitting the most, says the senior vice-president of the Angus Reid Polling Group. John Wright says 70 per cent of workers polled suggest they haven't gained from the economic upturn. (Say it ain't so. ed) Corporate political funding should end July 10 Bank mergers draw opposing views July 8 The mergers of the Toronto Dominion Bank and the Canadian Imperial Bank of Commerce will cost 17,000 to 30,000 jobs, depending on which economist you listen to, and that's not acceptable, said Len Nelson, northern B.C. representative of the Canadian Labor Council. Merger wave hits watchdogJuly 4 Some investigations not as thorough as group wants Bank mergers benefit Development Bank of Canada July 2 Metro Life takeover approved June 30 The takeover of Metropolitian Life Insurance Co. of Canada by Mutual Life Assurance of Canada has been approved by the federal government, Secretary of State Jim Peterson said Tuesday. Peterson said in a news release the approval was granted after the $1.2-billion takeover was reviewed and recommended for clearance by the Office of the Superintendent of Financial Institutions. Bachelor brokerages June 27 THEY STAND ALONE / While Midland Walwyn rushes to the altar with its moneybags suitor from the States, these seven independent investment dealers scorn the thought of wedded life. Our dollar is falling because productivity fell June 27 MasterCard sees threat in bank megamerger June 27 Banks show (small) signs of opening the books June 27 Eager for approval of mega-mergers, bankers lose some of their shyness Royal Bank paying back overcharged mortgage clients June 20 Godsoe seeks foreign allies June 15 Scotiabank boss is odd man out with stand against domestic mergers MPs push for end to tied selling June 13 Committee urges Bank Act amendment Merger Mania, Bigger Isn't Better its Just Bigger May 9 Globe & Mail Report On Business

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