Monday, January 28, 2008
TORONTO (Reuters) - Canada should allow its financial services companies -- banks and insurers -- to merge, subject to some conditions, Dominic D'Alessandro, the chief executive of Manulife Financial Corp , the country's biggest insurer, said on Monday.
"We should be looking at allowing cross-pillar mergers ... provided the widely held rule was preserved, and competition remained vigorous," D'Alessandro said during a panel discussion organized by the Conference Board of Canada in Toronto.
"Cross-pillar mergers" refers to tie-ups between banks and insurance companies, but D'Alessandro later hinted that barriers that stop banks uniting with banks and insurers joining up with their peers in Canada should also be scrapped.
Within Canada, there are now 10 or 11 "sizable" financial institutions, he said.
"Maybe, with a small population base like ours, we can't support 10 or 11. But we can support six or seven," he said.
In 1998, the Liberal government rejected two proposed bank mergers. Current Finance Minister Jim Flaherty, of the ruling Conservative Party, has repeatedly said bank mergers are not a priority for his government.
Flaherty repeated that position on Monday despite a resurgence in pressure recently from several quarters, including Canada's big banks, to end merger restrictions. The banks argue that without takeovers the country's institutions are becoming uncompetitive globally.
Under the "widely held" rule, ownership of Canada's big banks and life insurance companies is limited to 20 percent.
Manulife this month bought C$500 million worth of shares, in a private placement by Canadian Imperial Bank of Commerce , making it one of the biggest shareholders in Canada's fifth biggest bank.
(Reporting by Jonathan Spicer; writing by Nicole Mordant; editing by Renato Andrade)
Posted by Directory Insurance at 3:26 PM