Allow bank mergers: Mulroney

BERTRAND MAROTTE,  Globe and Mail Update

MONTREAL — Former Progressive Conservative prime minister Brian Mulroney says Canada's chartered banks should be allowed to merge.

Mr. Mulroney also played down concerns over the so-called “hollowing out” of Canada's corporate landscape through the spate of recent foreign takeovers, U.S. aluminum giant Alcoa Inc.'s hostile bid for Montreal-based Alcan Inc. being the latest example.

In an age of globalization, where mega-financial institutions are looming ever larger as a result of merger activity, the relatively small Canadian banks risk losing out competitively, Mr. Mulroney said Thursday after Quebecor Inc.'s annual meeting in Montreal.

“If there is a legitimate case to be made in favour of bank mergers, I don't see why not,” said Mr. Mulroney, who is a Quebecor director.

“The Canadian banks run the risk of being marginalized by the big American and European banks that are breaking away from the pack.”

Conservative Prime Minister Stephen Harper's government has so far declined to give the go-ahead to mergers in the industry, despite vigorous lobbying by the big five Canadian banks.

The issue is not seen as a big vote-winner among ordinary Canadians.

Mr. Mulroney also said it's his belief that Canada comes out a winner in the global takeover sweeps.

“My recollection of recent numbers that I've seen is that the dollar value of the acquisitions – in the neighbourhood of $500-billion – in Canada is exceeded by Canadian acquisitions elsewhere,” Mr. Mulroney said.

“The government still has the authority to review certain acquisitions and see if they are in the national interest. We still have that right,” he added.

“But, generally speaking, Canadians are acquiring more companies abroad than Americans and others are acquiring within Canada.

“That's the way it goes in a globalized world.”