FFWD Weekly
Copyright © 1998 All Rights Reserved.
| VIEWPOINT Last week's merger announcement by the Royal Bank and the Bank of Montreal touched off an emotional debate among Canadians. It is a debate that puts the forces of the common folk and nationalism squarely in the face of the looming evil of globalization. These are the wonderful themes that haunt our times. Unfortunately, reality is rarely as grandiose as CNN, Southam and the CBC want us to believe. The simple truth is that Canadians hate banks, and banks have no reason to care. Arguments about issues as abstract as national and global financial systems and economics are rarely informed debates. In the nine months until the task force on financial services gives Paul Martin its recommendations on what to do about bank mergers, Canadians will be subjected to an excruciating barrage of misinformation and rhetoric. The banks will argue in favor of expansion, competing in the global economy and becoming a player in the investment banking business. Great Canadians of the past, present and future will lament over the loss of marketplace competition and customer service. The desire of Canadian bankers to grow through mergers and compete globally proves they are nothing more than sheep in the marketplace, incapable of thinking up their own strategies for success. Around the world banks have been swept up by the same merger-mania that is turning the business world, into a series of enormous corporations. Huge multi-national conglomerates that are increasingly able to laugh at the puny governments that might dare to control how they do business. The companies have out-grown national governments. Lloyds Bank of Britain has shown that a little imagination can make a mockery of John Cleghorn and Matthew Barrett's claim that Canada's banks must go international to survive. After taking the same bath Canadian banks did in Latin America during the '80s, Lloyds Bank walked away from investment banking and got rid of all its international businesses. Instead it focused on providing services its customers want in the most efficient and palatable way possible. If you take the word of Canadian bankers, this small-minded view is a recipe for disaster. Instead, Lloyds has a 33-per-cent return on equity (Canada's banks average around 14 per cent), its share price has doubled every three years and both its big and small customers get what they want: service. Service is the battle cry of all those who oppose the bank merger. The reduction in competition caused by the merger will somehow make banks less inclined to provide customer service. Banks hardly provide any customer service now, so it should at least solve the ancient Zen riddle of how to get less of nothing. After all, these are the banks that, after 200 years of complaints, finally realized their customers do not like them. Instead of doing something to improve their customer service, Canada's banks responded to this revelation by spending $20 million to convince Canadians that they care. Bill Clinton has a better chance of convincing Americans that he's not a philanderer, but at least he has a reason to care. Canada's banks have only many more years of profits to look forward to - no matter what kind of service they provide the average Canadian. The strangest part about the announcement is how the Royal Bank and Bank of Montreal's paid explanation for the merger in Saturday's Globe and Mail ended up on the page opposite to all the stories on the bank merger. The Globe has always been a big supporter of the banks, but that editorial decision is a little disturbing. |