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Supplementary Opinion of the Progressive Conservative Party


In June 2000, the Liberal government introduced legislation and released guidelines dealing with prospective bank mergers in Canada. These measures would establish a framework with which bank mergers would be considered.

Banks would file an extensive application outlining their merger proposal along with a Public Interest Impact Assessment statement (PIIA).

The merger application would be subject to a very thorough review by the Competition Bureau. The Office of the Superintendent of Financial Institutions (OSFI) would review the prudential soundness of the merger.

The House of Commons Finance Committee and the Senate Committee on Banking, Trade and Commerce would then conduct public hearings and summon the merging entities as witnesses in order to determine whether the merger is in the ‘public interest.’ The PIIA would serve as a key indicator.

The Minister of Finance, in October 2002, surprised the markets when he asked the committees to hold special hearings in order to first clarify somehow what the government itself meant by its own phrase ‘public interest.’ If the government did not know what the phrase ‘public interest’ meant, maybe they should not have used it.

The timing of this “public interest reference” was most curious inasmuch as it came scant days after the Prime Minister reportedly overruled his own Finance Minister and scotched merger proposals between the Bank of Nova Scotia and the Bank of Montreal, as well as between Manulife and the CIBC. The timing clearly showed that this was nothing more than another delaying tactic used by a government that is politically scared to death of bank mergers and is stifling the growth of a sector vital to the Canadian economy.

We believe this is simply foot-dragging — foot-dragging that will continue because this is a government that doesn’t have the courage to make a difficult decision even if it is in the best interest of the country.

Ostensibly, after this Committee tables this Report, the government should be prepared to accept merger applications. However, whether this government will still be adverse to bank mergers remains to be seen.

Key Points

1.Public Interest Meaning: The Minister wanted the Parliamentary committees to clarify public interest. Such a term is difficult to clarify and snubs definition. There are many principles that might suggest that a particular bank merger is in the public interest, such as, a minimal reduction of retail services, no increased fees or no reduction in access to capital. But to bring clarity or define the phrase ‘pubic interest’ in all cases is to define the word ‘art’.
 In any event, the exhaustive review that is to be undertaken by the Competition Bureau will survey all the likely events that might occur as a result of any bank merger, such as, any substantial lessening of competition or decrease in services. The Competition Bureau’s report on any merger will address the key issues related to the public interest.
2.Another Government Delaying Tactic: This Government has had three years to start dealing with bank mergers since it introduced the Merger Review Guidelines in 2000. Giving the Minister an additional 90 days to respond to this Report is unacceptable. I would urge the Minister of Finance to show bold leadership and respond to the report within 30 days. Otherwise it would bring any proposal directly onto a collision course with the Liberal Party’s leadership convention in November 2003, thus delaying it further.
3.Bank Merger Process Is Still Politicized: The success of a bank merger proposal should not hinge on personal whims of prime ministers or finance ministers, nor should mergers be subject to another round of politicized Finance Committee hearings.
 In the words of Matthew Barrett, the Group Chief Executive of Barclays, "It’s purely political and not about concentration…I think it’s a disgrace".
 The merger entities should not have to appear before Parliamentary committees during the examination stage. Information pertinent to the merger will be fleshed out by the Competition Bureau and OSFI, under very transparent conditions.
4.Minister of Finance Should Justify His Decision: Currently, it is the banks who are to come before the Parliamentary committees to testify further as to why and how they want to merge. This is redundant. Their PIIA is sufficient to put forth that information.

It is the Finance Minister, as the person with the final say as to whether banks will be allowed to merge (or the prime minister in some governments), who should come before the Finance Committee to publicly state on record why a particular bank merger was accepted or denied. This would further help to depoliticize the bank merger process.


That the Minister of Finance respond to this Report within 30 days.

That the Minister of Finance appear before the Finance Committee to justify any decision on a proposed merger whether it be a denial or an approval.


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