All: What do you all think the chances of any of the following becoming law? And could this be the reason for the rise in TD bank shares in the last two days?
TORONTO, July 16 (Reuter) - Bank of Montreal called on the Canadian government to allow the six major banks to buy one another in a discussion paper released on Wednesday.
Bank of Montreal chief economist Tim O'Neill told a news conference that the paper, prepared by his department, targeted five recommendations at a Canadian government task force reviewing the future of financial services in Canada.
The recommendations are as follows: * Canada's six big banks should be permitted to merge with one another.
The government should allow foreign corporations to own more than 10 percent of a Canadian bank.
Barriers preventing the banks from using their bank branches and client lists to sell products such as insurance should be removed.
Only certain functions of the bank business should be regulated.
The government should open up to the payments system for financial institutions.
O'Neill said that the six big banks in Canada faced increasing competition both outside Canada and domestically and that these changes were necessary to ensure that the banks remained strong.
"Canadian banks should not be prohibited from merging in order to meet this competition and therefore to continue to provide their customers with financial services," he said.
Only 12 financial institutions, including the six biggest or "schedule one" banks, can now participate in the payments system with the Bank of Canada. That forces other institutions to clear their payments with one of the big six.
In order of size the big six banks in Canada are: Royal Bank of Canada <RY.TO>, Canadian Imperial Bank of Commerce <CM.TO>, Bank of Montreal <BMO.TO>, Bank of Nova Scotia <BNS.TO>, Toronto-Dominion Bank <TD.TO> and National Bank of Canada <NA.TO>.
The other participating members of the payments system are the treasury branch of the province of Alberta, the Caisses Centrale Desjardin du Quebec, Canadian Trustco Mortgage Company <CFS.TO>, Credit Union Central of Canada, Hong Kong Bank of Canada <OOO5.HK> and Laurentian Bank of Canada <LB.TO>.
O'Neill also said it was important that the government remove the restrictions barring the banks from using their branches and client lists to sell a variety of products, such as insurance or car leasing.
"Current restrictions on the marketing of insurance products by banks put consumers at a disadvantage," O'Neill said. "Studies on entries of banks into the marketing of insurance in other countries suggests the cost of insurance products for consumers have been reduced."
18:40 07-16-97
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