Case for the Big Bank Merger: Royal and Montreal
Cleghorn, John, Canadian Speeches
Chairman and CEO, Royal Bank of Canada
More financial services at lower prices, massive technology investments, stronger Canadian ownership and control of domestic financial services, improved ability to meet foreign competition, enhanced services for Canadian businesses at home and abroad, greater contribution to the Canadian economy, more jobs, more profit for shareholders. These are the rewards claimed for the proposed merger of the Royal Bank and the Bank of Montreal. Prepared text for a speech delivered to the Annual Business Day, Memorial University, St. John's, Newfoundland, February 6, 1998.
Royal Bank has proud roots in Newfoundland. As the last century closed (1895) when we were known as the Merchants Bank of Halifax, we opened a branch down on Water Street. It was a beachhead for growing our business--and Canada's business--along the sea lanes of the Atlantic and Caribbean. As a new century approaches, we're determined to strengthen and expand our roots--here in Newfoundland, across Canada, and around the world, especially in the United States.
That's why, two weeks ago, we announced plans for a merger of equals with another fine institution that's also grown with Canada, the Bank of Montreal.
Together, we want to create a Canadian-based global bank that can compete with the best in the world, anywhere in the world. Together, we want to provide Canadians with more competitive choices and better value for their money. And together, we want to ensure Canadians continue to get their share of the jobs and economic benefits that come from having a major international financial centre headquartered in our country.
I want to congratulate the organizers of this conference. In retrospect, you showed commendable foresight. With our merger decision, no subject is more relevant to me than the one you have asked me to address: Innovation, Change and Competition: Looking Beyond 2000.
Innovate... change... compete: it's the urgent need for us to do just that in the borderless banking world of the 21st century that drives our merger.
Our agreement raises a lot of questions. These are of legitimate concern to Canadians, starting with the regulators, and the government, whose approval we seek.
So this afternoon I'd like to tell you why our customers, employees, and shareholders, the communities we serve, and the Canadian national interest, will benefit from our decision.
And what better place to do this than at a forum on our economic future here at Canada's Atlantic gateway, organized by enterprising young business leaders of the future?
Our decision to merge can't be understood in isolation. So I want first to put it into the wider perspective of the role of the banks in Canadian society.
We have given you a pamphlet, Canada's Banks: a Strategic Asset, with facts and figures to support what I say.
Banking touches the lives of nearly all Canadians as customers, suppliers, staff and shareholders. One in every two adults is a bank owner, as a shareholder, or through mutual funds and pension plans.
Banks are the leading segment within the financial services sector, which now accounts for 16% of Canada's total gross domestic product. That puts financial services second only to manufacturing (which has 19%) in its contribution to the economic prosperity of our country. Financial services are a prime strategic asset for Canada.
As our pamphlet shows, Canadian banks give customers better, faster service with significantly lower service fees, and lower interest spreads, than banks in the United States and most other countries. We are leaders in offering customers efficient delivery systems like ATMs, telephone banking, PC banking, and credit and debt card services.
And, yes, Canadian banks are stable, and very proud of it. Since 1923, two Canadian banks in our nationwide system have failed. …