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RBC Financial Group Submission in Response to Finance Canada's Large Bank Mergers in Canada:
Comments on the Government's June 2003 Response to the House Finance and Senate Banking Committees
Comments on the Government's June 23, 2003 Response to The House of Commons Standing Committee on Finance and The Standing Senate Committee on Banking, Trade and Commerce on Large Bank Mergers and the Public Interest and Request for comments on various matters relating to Financial Sector Consolidation Policy
December 2003
Introduction
Since the last major review of the financial sector by the MacKay Task Force in 1998, the Canadian financial services sector has continued on a pace of rapid evolution, driven by an increasing demand for and adoption of new technology by Canadians, demographic shifts, a more global economy and ongoing changes to the legislative framework.
In place of the historical single pillar organizations focussed on providing a limited range of products and services, the market is now characterized by a number of integrated financial services organizations offering a broad range of banking, insurance and wealth management products to their customers. These institutions are complemented by several regional, non-traditional, and monoline providers including the credit unions (particularly in Quebec and BC), credit card issuers such as MBNA and specialized financing and leasing companies such as Ford Credit and Dell Financial Services. This intensity of competition and diversity of competitors is particularly evident in the banking and insurance sectors which, as noted in the Government's June response document, "are characterized by a relatively small number of large institutions...and by a number of other relatively small, but still significant, providers."
| While the financial services sector has served Canada well, it will be constrained from continuing to do so if it is not permitted to evolve (as it has throughout its history) in order to meet the interests of Canadians. |
While the financial services sector has served Canada well, it will be constrained from continuing to do so if it is not permitted to evolve (as it has throughout its history) in order to meet the interests of Canadians.
Recognizing this need for continued evolution, the Government introduced legislation in 2001 as part of its regular review to update the framework for the financial services sector in Canada. This was followed, in June of this year, by the Government's release of its response to the recommendations of the House of Commons Standing Committee on Finance and the Senate Standing Committee on Banking, Trade and Commerce on the public interest considerations in reviewing merger proposals between large banks, which clarified the public interest issues to be considered for large bank mergers. At the same time, the Government also requested public input on a number of broader financial services sector issues.
RBC is pleased that the Government has provided additional clarity on how the public interest will be assessed in the context of a merger review. We would encourage the Government to provide still greater certainty, where possible, around this assessment. Greater certainty surrounding the process will assist in good decision-making and strategic planning and contribute to the sector's ability to continue to play a significant role in Canada's growth and prosperity.
We welcome the Government's call for further input on a number of more general issues related to structure and competition in the financial services sector.
Principles Which Form the Basis for Financial Sector Regulation
Before addressing the specific questions posed by the Government in its June paper, we thought it would be useful to set out the fundamental guiding principles that we believe the Government should consider in developing the policy framework that will shape the evolution of the financial services sector in the years to come.
1. Policy makers should take a broad view of financial services
Policy decisions regarding the framework for the financial services sector, including mergers, should not be restricted to discussions about traditional markets and structures. These policy deliberations should also include a consideration of financial services more broadly defined. With emerging technology and new ways of doing business, including the Internet, traditional ways of analyzing this sector no longer reflect the nature of products, services, markets and distribution channels available to retail and business clients. A broader definition of financial services organizations and their markets will better reflect today's marketplace reality and the likely evolution of the sector in coming years.
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1. Policy makers should take a broad view of financial services 2. The financial services sector should be given the structural flexibility to evolve 3. The Government has a shared responsibility to foster a strong financial services sector 4. Fairness and equity should underpin the regulatory framework of the financial services sector |
2. The financial services sector should be given the structural flexibility to evolve
While general policy and regulatory guidelines surrounding the financial services sector should be established, the basic framework should ensure that financial institutions have the necessary flexibility to evolve and to adopt a variety of unique business models and structures, subject to prudential, competition and public interest safeguards. Such flexibility will allow Canada's financial institutions to best meet the needs of their customers and contribute to a strong Canadian financial services sector, which is very much in the interest of Canadians. In this respect, we recognize that the last round of financial reforms made significant progress in this area with the introduction of more flexible ownership and investment rules.
3. The Government has a shared responsibility to foster a strong financial services sector
Fostering a healthy Canadian economy in the 21st Century requires a policy and regulatory framework for the financial services sector that promotes growth and innovation in the sector. The Government has a shared responsibility to ensure that Canadians have a broad understanding of the importance of the evolution of the financial services sector and have confidence that the procedures in place to review consolidations will address all legitimate public policy concerns.
Government does not have a role in promoting particular transactions. It must, however, ensure that decisions affecting the financial services sector (as should consistently be the case for all sectors) are not based on extraneous or purely political concerns. The needs of consumers will remain a guiding force driving financial services sector policy. Decision-making based on narrow interests, rather than reasoned economic analysis of what may be in the overall interest of Canadian consumers, should be avoided.
4. Fairness and equity should underpin the regulatory framework of the financial services sector
A policy of fairness and competitive equity between financial services organizations should underpin the revised regulatory framework. Specifically, regulations should treat players equally and should, except where exceptional public policy considerations are warranted, allow similar institutions to take equal advantage of opportunities for growth and expansion.
Comments in Response to "Additional Significant Financial Services Sector Issues"
1. Cross-Pillar and Large Insurance Company Mergers
Should the Government consider a policy change to allow large demutualized insurance companies to merge with each other and/or with large banks? In this context should large, cross-pillar mergers and mergers among large insurance companies be subject to a public interest determination by the Minister of Finance, in addition to the standard regulatory review process involving the Competition Bureau and OSFI?
As noted above, the Canadian financial services sector has experienced significant convergence over the past several years – both across products and institutions. Legislative changes, including those introduced in 1992, specifically allowed cross-ownership between the financial services "pillars" with the result that the large banks and life insurers today can legitimately be better classified as financial services organizations, offering their customers a range of banking, insurance, investment and wealth management products through a variety of distribution channels. At that time, the changes noted above were very good steps in the right direction.
Since then, new technology and more sophisticated consumers have continued to contribute to product convergence in the financial services sector such that numerous products now exist that include elements of insurance, lending and investment product lines. The continuing evolution of the sector should not be constrained by an arbitrary limitation of players' ability to generate economies of scale or technological innovation, which is in the best interests of Canadians.
In light of the above, and consistent with principles outlined at the beginning of this document, we believe that Government policy should be amended to allow mergers between large financial services companies, including banks and insurance companies (whether formed historically as a mutual or not). This would allow for the creation of large financial services conglomerates that would be better equipped to competitively provide a fuller range of products and services to Canadians through a variety of distribution channels.
| ... we believe that Government policy should be amended to allow mergers between large financial services companies, including banks and insurance companies (whether formed historically as a mutual or not). This would allow for the creation of large financial services conglomerates that would be better equipped to competitively provide a fuller range of products and services to Canadians through a variety of distribution channels. |
In keeping with principles of fairness and equity, any merger between two large financial institutions, as defined through a common set of standards (see discussion below on definition of "large" institutions), should be considered under a consistent process, including reviews by the Office of the Superintendent of Financial Institutions (OSFI) and the Competition Bureau as well as the consideration of the public interest.
2. Possible Guidelines for the Future Structure of the Canadian Financial Services Sector
Are there any market structure characteristics of the financial services sector, which should be specified in advance of the Government considering merger proposals and, if so, what objective measures can be used in defining them? In this context, for example, should the Government specify a minimum acceptable number of large institutions and, if so, should "large" be defined in terms of product offerings, geographic range, market capitalization, assets, equity, or in some other way?
Consistent with the principles outlined at the beginning of this paper, we do not believe that there are any specific market structure characteristics of the financial services sector, which should be specified in advance of the Government considering merger proposals. Instead the Government should embrace the opportunity to foster the restructuring of the financial services sector so that Canadian financial institutions can support the development of a 21st Century economy in Canada.
Permitting only one merger between two large banks will do very little to foster a more competitive and robust financial services sector. Instead, it will create a dominant entity with the remaining players being significantly smaller, and therefore, less able to compete effectively. Furthermore, a policy which permits only one bank merger could well place the Government in the difficult position of having to choose a winner.
| ... the Government should embrace the opportunity to foster the restructuring of the financial services sector so that Canadian financial institutions can support the development of a 21st Century economy in Canada. |
We are confident that institutions completing mergers will, when drafting merger proposals, take into account the public interest criteria, competition, and solvency requirements established by the Government. Consequently, such proposals will ensure that future mergers are in the best interests of Canadians and the economy. We therefore believe that Government need not be concerned about the number or types of business deals that may emerge.
Canada has an extremely strong and vibrant financial services sector. It plays a vital role in servicing Canadian individuals and businesses, creates high quality jobs and fosters technical innovation. The challenge for all of the stakeholders concerned about the future of the Canadian economy is to ensure that the financial services sector remains vibrant in the future.
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We are confident that institutions completing mergers will, when drafting merger proposals, take into account the public interest criteria, competition, and solvency requirements established by the Government. Consequently, such proposals will ensure that future mergers are in the best interests of Canadians and the economy. We therefore believe that Government need not be concerned about the number or types of business deals that may emerge. |
The increasing importance of new technology and financial innovation has made the optimum economic size of operations for financial institutions much greater than had historically been the case. Under these circumstances, Canadian financial institutions that continue to lag behind stronger global competitors are inconsistent with the goals of building a 21st Century economy in Canada.
Government has recognized that mergers between banks can represent a legitimate business strategy1. The synergies and scale available through mergers should be of interest to all of Canada's banks, including the smallest. Indeed, stronger and more internationally competitive domestic financial institutions would contribute significantly to Canada's economic prosperity, particularly in terms of supporting the growth of jobs in Canada. Strength and size are also important so that institutions can provide individual Canadians and businesses with competitive products and services. Economies of scale and scope mean more efficiency, which in turn enable greater reinvestment for improving the range of products and services that can be offered in Canada. In addition, internationally competitive industries generate the capital and jobs necessary to support ongoing economic vitality and are key to maintaining a level of investment that keeps talented Canadians in Canada. This is as true in the financial services sector as it is for other business sectors in Canada.
| To the extent that Canadian financial institutions do not keep pace, there is a risk over time that the sector's ability to play an even greater role in supporting the Canadian economy will be eroded. |
To the extent that Canadian financial institutions do not keep pace, there is a risk over time that the sector's ability to play an even greater role in supporting the Canadian economy will be eroded.
The appropriate flexible policy environment is the best guarantee for the Canadian financial services sector to be able to continue to significantly contribute to domestic economic activity and expand high quality Canadian-based headquarters jobs. A financial services sector that evolves as a result of, potentially, more than one bank merger, bank and insurer mergers, insurer mergers and the possible expansion of foreign institutions in Canada would be robustly competitive.
Permitting more than one bank-to-bank merger will not reduce competition. Following consolidations, the financial services sector would more likely resemble other competitive business sectors in Canada. A study published in the Ivey Business Journal, which researched approximately 200 industries, concluded that in competitive markets, whether mature or expanding, there is only room for three full-time generalists, along with several (in some markets, numerous) product or market specialists."2 The paper notes this "Rule of Three" is widely in evidence in Canada3. The study concluded that, "the Rule of Three is about the search for the highest level of operating efficiency in a competitive market.
| Permitting more than one bank-to-bank merger will not reduce competition. Following consolidations, the financial services sector would more likely resemble other competitive business sectors in Canada. |
Industries with four or more major players, as well as those with two or fewer, tend to be less efficient than those with three major players."4
In our view, the financial services sector could well become more competitive post mergers. This would be an outcome consistent with other sectors in Canada where the market is characterized by three main players in addition to numerous smaller players and is intensely competitive. Furthermore, divestitures resulting from mergers would strengthen existing smaller players and/or add new competitors.
Trying to determine the competitiveness and appropriateness of the financial services marketplace based only on the number of large, federally regulated financial institutions does not truly provide an accurate assessment of the choices available to consumers. In particular, any assessment of the marketplace should look not only at large, financial services entities but on the individual product and service markets available to consumers, including those provided by smaller and non-regulated entities. In fact, in 2001, there were more than 2400 financial services providers in Canada, including domestic and foreign banks, mutual fund companies, pension fund managers, independent financial deposit and mortgage brokers as well as large, unregulated, multi-national competitors such as GE Capital and Dell Financial Services.
The impact of technology, and the choices consumers have when accessing financial services, whether it be through ATMs, the Internet or telephone, should also be a consideration in evaluating the competitiveness of the financial services marketplace. Specifically, consumers are no longer constrained by a local presence in accessing financial services and often have access to foreign and smaller providers, that, although they have a limited physical presence, provide an important range of options for Canadians.
| Trying to determine the competitiveness and appropriateness of the financial services marketplace based only on the number of large, federally regulated financial institutions does not truly provide an accurate assessment of the choices available to consumers. |
Canadians are, in fact, turning increasingly to technology to meet their financial services needs. Recent surveys have found that 16% of Canadians use the Internet to conduct the majority of their financial transactions. Furthermore, 34% of Canadians now do at least some of their banking online and many take advantage of telephone banking. In addition, Canadians are the highest users of debit cards in the world and, in 2002, logged 1.2 billion ATM transactions.
With respect to the definition of "large" institutions, it is our view that the existing definition of "large" (i.e., institutions with equity of at least $5 billion) should remain and be applicable to all financial institutions; not just banks.
All of the factors above should be taken into account in determining and defining markets as well as the appropriate framework for the sector. We will be providing a more detailed discussion on these points in our formal response to the Competition Bureau's review of the BMEGs.
| With respect to the definition of "large" institutions, it is our view that the existing definition of "large" (i.e., institutions with equity of at least $5 billion) should remain and be applicable to all financial institutions; not just banks. |
3. Process for Reviewing Multiple Merger Applications
Should the Government establish a window of time, say 60 days, following receipt of the first merger application, after which all applications received during that time period would be considered together?
As noted in previous submissions, RBC believes that the merger review process should be consistent, providing clarity, transparency and predictability to all participants. We also believe that the process should provide participants with a significant degree of certainty, particularly with respect to the ability to complete the merger process within a reasonable timeframe.
In addition, we agree with the Government that the merger review process should not create a "first-mover" advantage and that any transaction proposed within a given window, provided it meets the established competition, public interest and solvency tests, should be accepted. Within this context, we believe that it would be impossible for the Competition Bureau to complete its review of a proposed merger if the market were continually shifting as a result of an ongoing stream of transaction proposals. Instead, the Competition Bureau should have an opportunity to review the financial services marketplace with full knowledge of all of the proposed transactions, in order to properly account for the range of competitors that would be in place should more than one transaction be proposed.
In this regard, we agree that the Government should establish a fixed time period of 60 days following receipt of a first merger application for any other proposals for combinations of large financial institutions to be received. Any transactions received during this period would then be reviewed on a consistent basis, taking into account the competitive landscape that would emerge should all of those proposed transactions proceed. In order for the 60-day window to be effective, we suggest that the Government clearly identify in June 2004 the basis upon which mergers will be evaluated so that the participants in potential transactions can negotiate with each other confident that the rules will not change.
Additionally, immediately following the 60-day window, a moratorium on further large transactions should be put in place to allow for completion of the approval process as well as for marketplace adjustments.
4. Measures to Enhance Competition
How can divestitures in any merger context be used to maintain or enhance competition in the sector and contribute to public interest objectives? Should specific policies be designed to guide the divestiture process?
As noted in the Government's response paper, it has been suggested that in the context of mergers, divestitures, which involve the sale of assets (including bank branches) to a third party, may provide an opportunity to ensure that sufficient competition continues to exist following a large merger and/or to add a new competitor to the marketplace.
Experience in other jurisdictions has shown that divestitures enforced as remedies to address competition concerns in a merger could have significant spin-off benefits of creating new market competitors. This may have particular relevance in Canada's financial services industry where both second tier institutions and foreign institutions have indicated an interest in expanding their presence by participating in this process. Sales of assets and branches by merging institutions as part of divestitures could be particularly helpful in the creation of new market competitors or in the strengthening of existing players.
We do not believe there is a need for new guidelines or policies to guide the divestiture process. What is required is the respect for existing Competition Bureau processes and an opportunity for merging parties to discuss remedies as part of the Competition Bureau's review process.
In addition to focussing on divestitures, we recommend that Government also explore alternative remedies that could be considered in conjunction with, or as an alternative to, divestitures as part of the merger review process. Such alternatives may also have a role, because forced divestitures, particularly within a tight timeframe, could be disruptive, both for the merging institutions as well as their customers and employees. Merging financial institutions should be able to work with the Competition Bureau and the Minister to identify appropriate remedies to address the competition issues raised with respect to a particular transaction.
As the remedies appropriate for one merger transaction or situation would likely differ from those for another, a more flexible approach with a variety of options, (in addition to divestitures) such as an increased presence in a particular geographical area, or pricing considerations such as temporary freezes or uniform national pricing models, or product and technology commitments could be considered. This approach would ensure continued availability of products and services for consumers while allowing competitive forces and the marketplace to contribute to the evolution of the industry.
Is the absence of ATM full functionality an important impediment to competition in Canada? Would the introduction of ATM full functionality permit smaller regional banking operations and new entrants to expand their reach and be stronger competitive forces in Canada? If full functionality does hold significant promise to add an important new element of competition in the Canadian financial services sector, what steps should the Government take to ensure that it becomes a marketplace reality?
Full functionality of ATMs has been raised as a possible approach to enhance competition in Canada's financial services sector. On the surface, one may presume that expanded functionality of ATMs would facilitate a more competitive environment. However, there are a number of important and complex issues, which in our view, would make a move to full functionality impractical. These issues include:
1. Determination of pricing for third-party users and costs associated with technical reconfiguration;
2. Determination of services covered by expanded functionality;
3. Problems associated with the ATM network becoming a shared utility;
4. The reduction of competition and incentives to innovate resulting from use by "free riders";
5. Issues concerning software and hardware incompatibility; and,
6. Concerns regarding an increase in fraud and money laundering activities.
| ... the competitive and economic benefits that would flow to the sector and to Canadian consumers as a result of full functionality of ATMs are uncertain at best. |
More importantly, we believe ATM full functionality could well have an adverse impact on competition. Canadian banks have used ATMs as a competitive edge to differentiate themselves with their customers and from their competitors. As such, ATMs are a key market differentiator and not a commodity. Financial institutions have made distinctive choices and introduced different innovations into their respective delivery channels, including ATMs. Imposing ATM full functionality could have the perverse effect of reducing competition, limiting incentives to innovate, and ultimately resulting in fewer choices for consumers.
It is our position that the competitive and economic benefits that would flow to the sector and to Canadian consumers as a result of full functionality of ATMs are uncertain at best.
Are there any further public policy steps that could be taken to enhance the ability of credit unions to contribute to making the financial services sector in Canada more competitive?
A number of measures have been adopted in recent years to improve the competitiveness of provincial credit unions. Even if there are limits to growth in this sector that are inherent in the cooperative nature of their structure, we continue to support Government efforts to improve the competitiveness of this industry. More specifically, we would encourage the federal Government to work with provincial governments, which ultimately regulate this sector, to discuss additional measures that could be used to promote growth. The decision to move towards a model that enhances competitive opportunities nationally is one for the credit union movement and its members. To date, it is our understanding that there has been insufficient interest from the credit union sector to move in this direction. While we would welcome a strengthened credit union movement in Canada, we question how long flexibility for other financial institutions should be delayed pending such a development.
In particular, the Government may want to further explore the cooperative bank structure proposal, that we understand has been put forward for consideration by the credit union system.
Is the restriction on foreign banks that choose to operate directly through a branch, rather than a Canadian subsidiary, from taking retail deposits (i.e., of less than $150,000) a practical constraint and is it necessary on policy grounds? Should removal of such a condition be done unilaterally or should Government seek to do it on a reciprocal basis only if other countries have similar rules?
We understand that there are some prudential and regulatory policy reasons for preventing foreign branches from taking retail deposits, including difficulties with providing deposit insurance. Canada is not alone in this regard as other jurisdictions, including, for example, the United States, also generally do not permit foreign bank branches to accept retail deposits.
We would encourage Canadian regulators and regulators in other jurisdictions to work to resolve these issues to provide greater flexibility to foreign bank branches, including Canadian banks in other countries, within a regime of sound solvency regulation and consumer protection.
Additional Measures to Enhance Competition
In its response document, the Government notes that although significant steps have been taken to enhance competition in the Canadian financial services sector, there may still be more that can be done in this area. In this regard, we would like to reiterate two key issues that could significantly enhance competition in the marketplace.
Insurance Retailing
Legislation introduced over the past several years has moved substantially towards permitting convergence between the so-called "pillars". Moreover, legislation has steadily opened core banking areas to broader participation both by foreign entities and non-bank sectors. However, Canada remains the only country in the industrialized world to restrict insurance distribution by deposit-takers despite the fact that research continues to show that consumers benefit from the increased choice, convenience and competition associated with full insurance networking powers.
New important competition-enhancing moves in the banking sector have included permitting foreign bank branching, provisions for permanent narrowly-owned banks, easier entry for bank start-ups and opening up of the payments system to all financial institutions. In addition, at the federal level, a consumer protection framework has been established that is applicable principally to the banks, and there are also common pan-Canadian frameworks for privacy and complaints handling. Yet a key consumer benefit through insurance retailing by deposit-taking institutions (DTIs) remains unavailable.
This question was formally considered by the Government during the last Bank Act review process, starting with the report of the Task Force on the Future of the Canadian Financial Services Sector, published in September 1998, and the subsequent Parliamentary hearings following release of the Task Force report.
The Task Force had recommended:
- That once adequate privacy and tied selling regimes were adopted, federally regulated DTIs be permitted to retail insurance, with smaller DTIs with less than $5 billion in shareholder equity getting the power first, with larger DTIs obtaining such power at a later date.
- Employees of DTIs should comply with applicable provincial requirements regarding education and licensing of insurance salespeople.
- The industry should work with the provinces to develop a model code for licensing and consumer protection issues arising from the sale of insurance at DTI branches.
The Parliamentary Committees that reviewed the Task Force Recommendations expressed concerns about consumer protection issues, including privacy, coercive tied selling and unfair competition. While the positions of the two committees differed in detail, both suggested that the question of broad insurance retailing by banks be postponed until after a strong consumer protection package was in place and its effectiveness evaluated.
A strong consumer protection package and the other measures suggested by the Task Force have been in place for some time now. We believe there has been sufficient time to assess their effectiveness.
In fact, prohibiting banks from selling insurance through their branch networks is a significant obstacle to competition and could have a negative impact on Canadians. Studies show that only 61 per cent of Canadian households have individual life insurance, down from 69 per cent a decade ago. Research also indicates that 39% of Canadian households do not have a personal insurance agent and 32% feel they need more insurance protection. The impact of this underserved insurance market is significant and leaves families exposed to a decline in their standard of living upon the death of a breadwinner. Quebec has permitted the distribution of insurance through the branches of the Caisse Populaire for many years with positive results for consumers. Recently, as part of its review of financial institution legislation, BC has proposed that all credit unions and trust companies be permitted to sell insurance and to share premises with insurance agencies.
| We urge the Government to consider ... the best interests of consumers (as it does when considering bank mergers) by immediately removing the restrictions on insurance distribution by deposit-takers ... |
The inability for DTIs to offer insurance also represents a significant competitive inequity for financial services providers. Insurance companies, agents and brokers are able to offer a full range of products and services through their distribution outlets, including deposit, lending and insurance through a single point of contact. In fact, one of Canada's newest banks, Bank West, by structuring its "branches" as insurance offices is able to offer its customers a full suite of financial products and services, something that would be prohibited if these outlets were operated as bank branches.
We urge the Government to consider the competitive implications of continued restrictions in this area and to consider the best interests of consumers (as it does when considering bank mergers) by immediately removing the restrictions on insurance distribution by deposit-takers so that all financial services providers are able to offer a complete range of products and services to their customers through the distribution channel of their choice.
Costs of Regulation/Regulatory Duplication
The multiple levels of financial services regulation, including inconsistent, overlapping and duplicating federal and provincial rules, and the corresponding costs of complying with multiple and conflicting jurisdictions continue to impact the competitiveness of the Canadian financial services sector. More specifically, the high costs of regulation contribute to reduced growth and expansion in the industry as well as to a lack of new entrants.
In this regard, we urge the Government to take a leadership role in working with provincial governments to eliminate unnecessary overlapping and inconsistent regulation and to adopt measures to reduce the costs associated with regulation in this critical sector.
Review of the Merger Enforcement Guidelines as Applied to a Bank Merger
The Government's response paper notes, "in light of the work of the two committees and developments in recent years in Canada and abroad, the Government is asking the Competition Bureau to review the BMEGs" (Merger Enforcement Guidelines as Applied to a Bank Merger).
RBC strongly supports this review process and recommends that the four guiding principles outlined above in this paper, in respect of the regulatory framework for the financial sector, also guide the review of the BMEGs.
We understand that the Competition Bureau is seeking public comment on this subject by February 2, 2004. RBC will be making a formal submission to the Bureau to provide input for the review of the BMEGs.
Conclusion
RBC is pleased that the Government has undertaken consultation on these broader issues surrounding a future framework for the Canadian financial services sector and we look forward to release of policies on these issues, as well as revised merger review guidelines, by June of next year.
We strongly believe that the Government must create a process that is clear, fair and appropriate, in its attempts to clarify the rules around the evolving financial services sector.
| We strongly believe that the Government must create a process that is clear, fair and appropriate, in its attempts to clarify the rules around the evolving financial services sector. |
1 In Reforming Canada's Financial Services Sector: A Framework for the Future, June 25, 1999, the Government noted, "In this era of rapid economic change, technological revolution and globalization, mergers and acquisitions are legitimate business strategies for growth and success...." In the Policy Document accompanying Bill C-8, February 7, 2001, when commenting on large bank mergers, it said, "The Government believes that mergers can be a viable business strategy...." [Return]
2 Jagdish N. Sheth and Rajendra S. Sisodia, Competitive markets and The Rule of Three (Ivey Business Journal, September/October 2002), page 1. [Return]
