Canadian Banker Urges Lawmakers To Allow Mergers Of Banks And Insurers
The Canadian government should drop its ban on mergers between national banks and insurance companies, a Canadian bank executive recently told a committee of lawmakers in Ottawa.
“It would be timely and helpful if instead of focusing only on the five major banks you were to broaden your scope to encompass the five major banks and the two widely held life insurance companies,” said Ed Clark, president and CEO of Toronto-Dominion Bank Financial Group, in testimony before the House of Commons finance committee.
The insurance carriers Clark was referring to were Manulife Financial Corp. and Sun Life Financial Services of Canada Inc., both of Toronto.
The committee has been holding hearings on loosening restrictions on bank-bank mergers, now tightly controlled under Canadian law. Insurer-insurer mergers are also restricted, while bank-insurer mergers are forbidden altogether in Canada.
Canadas five major banks are Scotia Capital, Canadian Imperial Bank of Commerce, Toronto-Dominion Bank Financial Group, Bank of Montreal, and the Royal Bank of Canada.
“I would urge you to settle the issue of selling insurance in bank branches and set out an appropriate time frame,” Clark told the committee. “From a business point of view, we need to know if a merger with a life insurance company can be undertaken to create synergies, or if its only potential is to create the bulk required to make international acquisitions.”
However, Tony Comper, chairman and CEO of Bank of Montreal, sounded lukewarm about bank-insurer mergers.
Comper was quoted in recent Canadian press reports as saying that did not understand the economic advantages of such mergers.
Meanwhile, the top executive of Sun Life Financial told the Canadian Club of Montreal recently that he thought there were few obvious advantages to bank-insurer mergers, according to a report in a Montreal newspaper.
The executive, Donald Stewart, said recent large bank-insurer mergers in Europe, such as between Credit Suisse Bank and the large Swiss life insurer, Winterthur, were unsuccessful.
Reproduced from National Underwriter Edition, March 10, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved. Copyright in this article as an independent work may be held by the author.