Case Study 3
Canadian Bank Mergers Four of Canada’s five big banks have announced their intention to merge into two “mega banks”. This will represent an unprecedented concentration in Canada’s financial sector – the greatest in any developed country. It will also leave Canadians vulnerable to changes in other parts of the world where these mage-banks do business – a financial crunch in those places could lead the banker to heighten credit or loans in Canada. As a practical daily matter, these mergers are also likely to lead to bank, branch closures and staff reductions to eliminate overlap locations. Some people will have to travel further to their local bank; electronic banking & ATMs will be the primary option. The news of the intended merger was initially on the front pages, but subsequently there is little coverage, mostly limited to business pages. Formally a decision on this issue will be made by a little known (and very pro-business) section of the government “The Competition Bureau”. The government has deflected political questions to this bureaucratic process. The Prime Minister (Liberal) could prevent the mergers. He is close to the end of his term, and looking at his “legacy”, (Post P.M. Reputation) but also his future employment. The finance minister (Liberal) is expected to become the next Prime Minister. To do so, he needs the support of his party, but he is also a big business man himself and will need political (& financial) support from big business to become a successful P.M. An election is not expected for about two years. The two right-wing pro-business parties hope to have formed one united party by that time. The official opposite is the party reflecting Quebec nationalism it will never form a majority government and is not much interested in the bank mergers issue. The four banks involved are moderately to heavily committed to these mergers. If two of them merge, the other two will be disadvantaged if they do not do the same. The fifth large bank is not in favour, but will not vocally oppose the merger – it also sees some potential advantages for itself, if the mergers go ahead. The Council of Canadians is an anti-globalisation/corporate control NGO. It had a large & active grass roots membership, which includes many senior citizens & also young antiglobalisation activists across the country (though, few in Quebec) It tends to reflect social ideas that range from social democratic to “Left Liberal” ideals. There is another NGO that specializes in issues to do with Canadian banks. It is small, does not communicate well with the public but has a lot of expertise. It has some ties to the Liberal party.