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Member, Beacon International Group, Ltd.
OTTAWAThe Canadian government has decided against issuing new guidelines on large bank/insurer mergers, keeping its ban on such deals in place.
The Department of Finance Canada had been reviewing its policy on several issues relating to bank merger applications, including whether to remove the restriction on so-called "cross-pillar" mergers--those involving different types of financial institutions (BI, April 12, 2004).
A decision was expected in June 2004, but the review was delayed several times due to last year's federal elections and an ongoing government scandal.
Following those delays, Canadian Minister of Finance Ralph Goodale this week decided to forgo issuing the guidelines after consulting with leaders from Canada's major political parties.
"After reviewing the responses, I do not believe it would be appropriate to bring forward guidelines on such an important issue in this environment, where it runs the risk of being politicized," he said in a statement.
The government's ban on cross-pillar mergers has been in place since 1999. It stems from legislation enacted that year that allowed federally incorporated mutual life insurers to demutualize into stock companies, which made them potential targets for acquisition. The issue of whether the ban should continue came to the fore in 2002, when reported merger talks between Toronto-based Manulife Financial Corp. and the Canadian Imperial Bank of Commerce stalled because of the government ban.