FINA Committee Report

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APPENDIX A
LETTER FROM THE MINISTER OF FINANCE
AND THE SECRETARY OF STATE
(INTERNATIONAL FINANCIAL INSTITUTIONS)

October 24, 2002

Ms. Sue Barnes, M.P.
Chair, Standing Committee on Finance
House of Commons
Ottawa, Ontario
K1A 0A6

The Honourable Leo Kolber
Chairman
Standing Senate Committee on
Banking, Trade and Commerce
The Senate of Canada
Ottawa, Ontario
K1A 0A4

Dear Ms. Barnes and Senator Kolber:

As you are aware, when the government introduced legislation on February 7, 2001 to establish the new framework for the financial sector in Canada, it issued guidelines governing the review process for mergers among banks with more than $5 billion in equity. That process includes three parts. The Competition Bureau will review the competition issues, the Office of the Superintendent of Financial Institutions will review prudential issues and the government will need to assess the public interest issues. In this latter regard, the House of Commons Standing Committee on Finance and the Standing Committee on Banking, Trade and Commerce will be asked to conduct public hearings into the broad public interest issues that are raised by a specific merger proposal.

Since the release of these guidelines, some stakeholders have stated that the public interest tests associated with a bank merger review need greater clarity. The government agrees, and in this regard, it would be most helpful if your Committees would provide us with views on the major considerations that should apply in determining the public interest.

In providing your advice, you may wish to consider the public interest implications for large bank mergers on:

the access of Canadians in all regions to convenient and quality financial services, giving special attention to the disabled, low income, and rural communities;

the choice among financial services providers and the availability of financing for businesses, especially small businesses, and Canadians;

the creation of long-term growth prospects for Canada through more effective Canadian-based internationally competitive institutions; and

any adjustment or transition issues, including the treatment of employees.

The Secretary of State (International Financial Institutions) would be pleased to work with you during the course of your deliberations. It would be appreciated if you could provide your advice at your earliest convenience.

Yours sincerely,

The Honourable John Manley, P.C., M.P.

The Honourable Maurizio Bevilacqua, P.C., M.P.