Monday, March 17, 2008

Imminent Canadian Bank Mergers?

Back in 1998, the Canadian government rejected the proposed mergers of the Royal Bank with the Bank of Montreal and CIBC with the Toronto-Dominion Bank.

According to, the Finance Minister concluded that the mergers were not in the public interest as they would result in too much concentration of economic power in Canada in the hands of too few financial institutions, a reduction in competition in the Canadian financial services sector, and a reduction in the Canadian government's flexibility to address future concerns.

With the scandalous turmoil affecting American financial institutions and Canadian bank share prices dropping in value (particularly those of BMO and CIBC) thanks to concerns of their own credit woes, one has to wonder if Canadian bank mergers are just around the corner.

After all, the current crisis would provide the perfect excuse for the government to give in to industry demands and allow bank mergers to occur for the "best interests of the nation's economy."

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