Canadian Imperial Bank of Commerce -
Finance Minister nixes bank mergers
Canadian Imperial Bank of Commerce
CM
Shares issued 421,209,522
1998-12-11 close $34.15
Monday Dec 14 1998
See Toronto Dominion Bank (TD) News Release
Mr. Frank Swedlove of the Department of Finance Canada reports
Finance Minister Paul Martin today announced that the bank mergers proposed
by the Royal Bank of Canada and the Bank of Montreal, and by the
Toronto-Dominion Bank and the Canadian Imperial Bank of Commerce will not
be allowed.
The Minister based his decision, in part, on information the government received
from the Competition Bureau and the Office of the Superintendent of Financial
Institutions (OSFI), as well as the MacKay Task Force report recommendations
and input from parliamentarians and public consultations.
The Minister said the mergers were not in the best interests of Canadians and will
not be allowed to proceed because they would lead to:
an unacceptable concentration of economic power in the hands of fewer, very
large banks;
a significant reduction of competition; and
reduced policy flexibility for the government to address potential future prudential
concerns.
"This is a decision," the Minister said, "that reflects the government's commitment
to ensuring strong competition in the financial services sector.
"Quite simply, allowing the mergers would further concentrate a very high level of
economic power in the hands of an even smaller number of very large institutions.
"Looking forward, we believe that our immediate priority must now be to focus on
establishing an appropriate policy framework for the financial sector for the 21st
century.
"Whereas the merger proponents wanted the mergers to be allowed in order to
change the status quo, we believe the status quo must be changed before any
merger can be considered.
"The government will not consider any merger among major banks until the new
policy framework is in place.
"But even then, new proposals will first have to demonstrate, in the light of the
circumstances of the day, that they do not unduly concentrate economic power,
significantly reduce competition or restrict our flexibility to address prudential
concerns," he said. |
