Thursday, July 10, 1997
OTTAWA - Today, the Canadian Community Reinvestment Coalition (CCRC) called on Jim Peterson, the Secretary of State (International Financial Institutions), to address consumer concerns about the proposed mergers of the Royal Bank and London Insurance Group, and the Bank of Nova Scotia and National Trust.
"We are very concerned about the potential impact of the mergers on financial consumers," said Duff Conacher, Chairperson of the CCRC (See attached list of 50 groups), "The mergers increase the likelihood of coercive selling practices and invasions of privacy through the disclosure of personal information between the banks and their subsidiaries, and the government should clearly prohibit these practices."
The CCRC also expressed concern about the Royal Bank taking a generous tax "write-off" for the "goodwill" portion of its proposed purchase of London Insurance Group. "The government should prohibit this type of write-off to ensure that such takeovers are not unjustly subsidized by taxpayers," said Conacher.
"We are also concerned that the banks will use the profits they earn in their protected domestic market to subsidize their subsidiaries' costs," said Conacher, "This would allow the subsidiaries to lower their prices in the short term, creating an unfair competitive advantage for them in the marketplace which could force other companies to merge in order to survive and reduce consumer choice in the long term."
Mr. Peterson has asked the Task Force on the Future of the Canadian Financial Services Sector to give its views by tomorrow concerning the criteria the federal government should use in reviewing such mergers, even though its final report is not due until September 1998. "It is premature for the federal government's Task Force to be making recommendations on these issues,' said Duff Conacher, "They have yet to conduct a meaningful public consultation with financial consumer and small business concerns to ensure that their concerns are addressed in the government's review process for such mergers."
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