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Canadian Bank Mergers
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Bank Mergers -The Issue
The prominent issue of mergers between large banks has attracted a substantial number of critics as well as supporters over the last decade. With increased globalization, there seems to be an increasing pressure for Canadian banks to extend in scale in order to achieve continued growth and prosperity in the financial service sector both domestically and internationally. Even though, the Canadian Banking industry is heavily regulated it still faces enormous competition from foreign banks and financial institutions. The issue raises a number of controversies given the Canadian economic dependency on these large financial institutions and their effect on public interest. ... It is argued that based on mergers around the world the implication of this decision would lead to higher fees, closed branches, and less customer service. As a result the Finance Minister is faced with a sensitive decision which must balance between ensuring the best interest of the public as well as promoting Canadian economic growth and global presence. The decision to reconsider a merger between the TD Bank and the CIBC (which was proposed in April 1998 and rejected in July 1998 ) requires an extensive review and analysis of all affected parties.
Background
The heavy regulation of the Canadian Banking industry dates back to the first bank charters granted to the Bank of New Brunswick (1820) and the Bank of Montreal (1822) . For decades the Canadian Banking regulatory bodies adopted an informal “big shall not buy big” policy prohibiting mergers between large financial institutions. However with the increase in globalization and foreign competition the government appointed a Task Force to analyze the future of Canadian Financial Service Sector in 1997.
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Paper Information
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Title: Canadian Bank Mergers
Words: 1269
Rating: None
Pages: 5.1
submitted by: goralsa
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