The Business Beat
By Jason Brown
Experts have been calling the startling merger plan of the Bank of Montreal and Royal Bank of Canada as a dare to Finance Minister Paul Martin. I say the plan is a virtual coup d’état.
By ambushing Martin with their idea of a megabank in the fashion they did, the two banks have taken decision- making powers away from our elected officials. Or at least, that was their aim, and it’s a dangerous precedent.
Royal’s John Cleghorn and Montreal’s Matthew Barrett knew they probably wouldn’t get approval for such an idea so they’ve blatantly tried to undermine the legitimacy of the Canadian government.
They’ve succeeded in giving the issue a false sense of urgency so other banks must now consider mergers to remain viable competitors.
However, if the $40-billion deal is allowed to go through without proper scrutiny and consultations, it would send the wrong message. It would be a clear indication to others who have the potential to send Canada’s economy into a tailspin that what they want, they get. Or take.
Cleghorn and Barrett have tried to establish themselves as being beyond, or, better yet, ahead of the law.
Look at the wording of a nation-wide advertisement the two banks issued the day after the big announcement: “As you read this, it is not a done deal. The government must give its approval to the merger and that will take time,” or, “We value your business and you can be assured that until the merger is approved, each of us will continue to be a fierce competitor in the marketplace, providing customers with high standards of service.”
The egos these guys have are astonishing. No “ifs” in there at all. They seem to know the government’s decision before the government makes it.
Martin now stands as the vanguard for the democratic principles people outside the banking system live by.
Martin has said he won’t make any decision until a federal task force on financial services hands in its report in September and the government has a chance to consult the public.
That’s a good first step to remind Cleghorn and Barrett they don’t dictate government policy.
Canada’s banks recently spent $20 million on an advertising campaign to improve their image in the eyes of the Canadian public. Funny they should sink all that money into a project only to voluntarily take that image to a new low by trying to deny the right of elected officials to govern.