Doug Ashbury
Northern News Services

NNSL (Aug 26/98) - A merger of Royal Bank and Bank of Montreal will preserve and enhance services, not limit banking choices, a Royal Bank executive said.

"We believe Canadians will be well served by this merger of equals," Bill Bannister, the bank's vice-president, Alberta North and NWT, said.

Royal and Bank of Montreal made their stunning merger plans known Jan. 23. CIBC and Toronto Dominion would later propose joining forces.

"We both (Royal and Bank of Montreal) share a vision of what we'd like to achieve in the next millennium," said Bannister.

"We want to ensure decisions about the financial services industry in Canada continue to be made by Canadians."

Bank consolidation in the United States and abroad is creating more and more powerful entities.

This global trend creates financial sector giants that use economies of scale to expand into Canada, he said.

"There's nothing wrong with this, but these low-cost competitors are taking business away from Canadian banks one piece at a time."

Many Canadians, some Yellowknifers among them, have already opted for a Citibank or some other U.S. company's credit card.

Bannister said Citibank's securing the credit card business of the Government of Canada is one stark example of a non-Canadian competitor capturing Canadian business. Citibank's parent, Citicorp, two months ago proposed a merger with Travellers Group. The combined entity would be number one by market capitalization in the world's financial services sector.

Bannister also said that despite fears that Canadian mergers would limit choices, Canadian banks now compete in Canada with 50 foreign-owned banks, over 50 trust companies, 2,500 credit unions and 150 life insurance companies.

There is also competition from foreign monoline companies -- those that specialize in just one line like credit cards or mutual funds.

There are 18 credit card companies operating in Canada. Canadian banks hold only 30 per cent of Canadian mutual fund assets, he said.

MBNA, a U.S. credit card company, has over $56 million in assets -- more than all Canadian banks combined.

"They won't build one branch in rural Canada or in the North."

Foreign banks, unlike domestic banks, are doing business in Canada without investing in Canada, he said.

Last year, Royal paid $1.5 billion in tax, $3.4 billion in salaries and bought $1.8 billion worth of goods and services in Canada and paid out $600 million in dividends.

Bannister estimated the combined Royal Bank-Bank of Montreal will donate over $250 million to charity and other community organizations over the next five years.

Bannister said no small town or remote location will lose service because of the proposed Royal Bank of Montreal merger.

In a community where there is only Royal and Bank of Montreal, there will be no layoffs, though the premises may be consolidated.

He said if the merger goes ahead, the number of employees at a combined Royal-Bank of Montreal bank may even grow. It certainly won't decline, he added.

Since Royal's acquisition of Royal Trust in 1993, the bank's employee numbers have grown to 52,000 from 49,000, he added.

Asked when the banks anticipate word on whether or not the federal government will approve the merger, Bannister said ideally the institutions hope to know by January. Factor in the year 2000 bug and it will likely be mid-2000 before Canadians see the merger, if approved, take shape.