Besides, who cares if interest rates go up? Read this:
TORONTO, Jan 22 (Reuter) - Lifting barriers to bank mergers in Canada could lead to American
domination of Canada's financial services industry, Toronto-Dominion Bank warned on Wednesday.
"Knowingly or unknowingly, while the word may be merger, the meaning is American ownership," TD
president Charles Baillie told shareholders at the bank's annual meeting.
The warning from Canada's fifth-biggest bank comes as a federal government task force is studying
competition issues, including whether the current 10-percent limit on bank ownership should be
removed.
Baillie noted the 10-percent rule was legislated in the mid-1960s partly because Chase Manhattan Corp
wanted to buy TD Bank. "Today, American banks are more flush with equity than are any of us. We
must confront the implications of the probability that lifting the 10 percent limit would result in continental,
not Canadian consolidation," he said.
Several of TD Bank's bigger competitors have said bank mergers are necessary if Canadian banks are
to stay competitive internationally. Royal Bank of Canada RY.TO and Canadian Imperial Bank of
Commerce CM.TO have complained that their international rankings have slipped in recent years.
In an interview with a Vancouver newspaper on Wednesday, CIBC president Holger Kluge warned that
Canada risks becoming irrelevant on the world financial stage if its financial institutions cannot compete
globally.
"Do we want to continue to have a financial center in Canada or do we want to become a branch plant
economy for the U.S.?" Kluge told the Vancouver Sun.
TD Bank, the smallest of Canada's five major banks, said its argument may appear to be self-serving.
But Baillie said his speech was intended to provide some balance to the bigger-is-better message spread
by TD's pro-merger rivals.
Although the rankings of Canadian banks have dropped on a global scale, Baillie said their status within
the North American market has not changed appreciably.
For example, Royal Bank and CIBC were sixth and seventh in terms of asset size in North America last
quarter. In 1977, Canada's two largest banks ranked sixth and eighth respectively in North America.
TD Bank's ranking was 14th last year compared to 16th in 1997. "North America is where our major
clients and customers are. In other words, in the league in which we play, we are doing rather well,"
Baillie told shareholders.
(( Reuters Toronto Bureau (416) 941-8100 )) |
