Feds decline to pursue bank merger guidelines

The current political climate is not right time to issue new guidelines on large bank/insurer mergers, the Canadian government has announced.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 mergers between different types of financial institutions. The decision not to issue new guidelines means the current ban against bank/insurer mergers remains in place.Minister of Finance Ralph Goodale recently issued the following statement concerning the release of new guidelines on large bank mergers in the Canadian financial sector:”Earlier this summer, I wrote to the finance critics in the three opposition parties, asking whether we can proceed in a serious fashion to deal with the issue of large-scale bank mergers,” Goodale said in a statement. “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.”In the meantime, the Government will proceed with its review of Canada’s existing legislation that governs the financial services sector. This review will deliver tangible improvements for consumer protection, streamline regulation, and create opportunities for our financial sector.”The statement says nothing about whether the proposed Bank Act review will include such items as banks retailing insurance products.