Royal Bank and Bank of Montreal stunned the country's financial sector Friday by announcing a plan to merge.

The new bank would rank as North America's 10th largest.

"Both bring strengths to the table" and the end product will benefit customers and shareholders, Nelson said.

For staff, it is "very much business as usual," he said.

On whether the proposed merger will lead other Canadian banks to join forces, Nelson said that would be an "interesting wager. For (Finance Minister) Paul Martin it's not a topic until September."

Royal has branches in Yellowknife, Hay River, Cambridge Bay, Rankin Inlet and Iqaluit.

The Hay River branch was Royal's first in the North opening in the 1950s. Yellowknife's Royal Bank opened in the mid-1970s.

Bank of Montreal senior manager Gordon Van Tighem said he is "viewing the announcement positively."

But it could take eight months to three years for changes to be realized, he said.

"Mergers are a thing of the present."

Bank of Montreal has branches in Yellowknife, Fort Smith, Iqaluit and Inuvik.

It first opened in the North in Iqaluit in the 1950s.

The proposed merger comes as global competition increases.

New international competitors continue to enter the Canadian market.

Global giants Hongkong Bank and Citibank have already carved out a significant presence in Canada.

Other financial institutions that have made in-roads into the Canadian market include Wells Fargo & Co., MBNA Corp., Capital One Financial Corp., Fidelity, and GE Capital Corp.and ING.

Van Tighem said Dutch bank ING, with only a couple dozen Canadian-based employees, has access to the entire Canadian market.

And seeing Citibank VISA cards in the North is common, he added.

"These international financial services giants threaten to marginalize much smaller Canadian banks in the international market, and gain a competitive advantage in Canada by applying their greater scale and investments in technology," Royal Bank of Canada chairman and chief financial officer (CEO) John Cleghorn said.

"Together, we can progress from strong Canadian players today to a recognized participant in the increasingly global financial services industry," Bank of Montreal chairman and CEO Matthew Barret said.

Under the agreement, Royal shareholders will get one common share of the new bank for every share held. Bank of Montreal shareholders will get .97 of a common share in the merged bank for every share held.

That means Royal shareholders would own 54.9 per cent and Bank of Montreal shareholders would own 45.1 per cent on closure of the deal. The combined market capitalization of the new bank would be $38 billion, putting it in the top 10 in North America and in the top 25 in the world.

The largest bank in North America by market cap is NationsBank with $57.7 billion US.