Four of the BigFive chartered banks have proposed to merge - the Royal Bank of Canada (RBC) and the Bank of Montreal (BoM); The Canadian Imperial Bank of Commerce (CIBC) and Toronto Dominion (TD). If the federal government allows the merger to proceed, the two new megabanks would, in the words of Scotiabank chairman Petrer Godsoe, control 70 per cent of the core banking market in Canada. The vast majority of Canadians' deposits, savings and loans would be held by just two banks.

1 How big are they?

The Big Five already dwarf all other Canadian corporations. In 1997, the banks' combined assets totalled $1.05 trillion. Their combined profits for the year were $7.13 billion, an increase of more than $1 billion over the previous year. That year _ 1996 _ the Royal Bank posted the highest profit ever recorded by a Canadian company: $1.43 billion.

2 How big would they be?

The new megabanks would tower over the Canadian economy. The RBC/BOM bank alone would have assets of $453 billion, more than the annual revenues of the federal, provincial and territorial governments combined. It would have 17 million accounts and, with 92,000 employees, would be the largest single employer in the country. Its power to decide the success or failure of small and medium-sized Canadian businesses through granting or withholding loans would be staggering. On its own, it would constitute the greatest non_government influence on the national economy and, if it ever failed, the most devastating.

3 What would happen if the banks merged?

The banks have tried to downplay and even deny the impact that the proposed mergers would have on customers and the economy, arguing that they must rnerge in order to ensure a Canadian presence in both the domestic and global markets. Critics, such as the Canadian Community Reinvestment Coalition (CCRC), point to other countries where bank mergers have led to higher fees, closed branches and less customer service. in. the case of the RBC_BOM merger, industry analysts estimate that at least 9,000 jobs (or 10% of the banks' combined workforce would be cut and as much as half of the more than 2,500 branches would be closed. And that's just for starters.

Bigger banks would mean less competition _ meaning less choice in mortgage rates and other consumer loans, fewer jobs and bank branches (especially in smaller rural communities), and fewer loans to small and medium_sized Canadian businesses _ the same businesses that create most of the new jobs in the country.

4 Do the banks really need to be bigger?

No They certainty don't need to get any bigger to succeed internationally _ as Scotiabank chairman Peter Godsoe attested this spring in his presentation to the Liberal caucus task force on financial services. "We don't have to merge with another Canadian bank to achieve international success," stated Godsoe, referring to Scotiabank's lucrative dealings in 53 other countries. Others argue that Canadian banks are already too big _ the result, in part, of a decade arid a half of deregulation that has left Canadian banks with an increasing stranglehold over the country's financial services sector (trust, brokerage and insurance services).

5 What should the federal government do?

First, stop the proposed mergers by the banks _ they're already too big for our own good. Second, tax the banks _ and their excessive profits _ at a reasonable rate. (The phenomenal growth in bank profits over the past five years hasn't occurred by accident. It's occurred, in part, because banks pay income tax at a rate lower than most Canadian workers!) Third, force the banks to reinvest in Canadian communities, as called for by the Canadian Community Reinvestment Coalition.

CANADIAN PERSPECTIVES $ SUMMER 1998

Information from Ont. Coalition for Social Justice.