The government’s views on competition in banking are a mystery. In fairness, that reflects two very different roadmaps for ensuring the banking sector’s roleRBC and TD executives can argue that if the foreign owner of a second-tier grocery chain or auto insurer – with market share comparable to HSBC Canada’s – sold a subsidiary, and a market leader such as Loblaw or Intact Financial made the best bid, regulators would approve the deal in a heartbeat.
The key data guiding the government’s decision on HSBC Canada’s sale is market clout, measured by the banks’ share of domestic loans and deposits. By these standards, HSBC Canada is a pipsqueak. The bank makes approximately 2 per cent of loans, including mortgages, and holds 3 per cent of deposits, according to data from its regulator, the Office of the Superintendent of Financial Institutions.
Dominant U.S. banks have significantly smaller customer bases, as a percentage of a far larger market. The two largest competitors – JPMorgan Chase & Co. and Bank of America – hold 16 per cent and 15 per cent of deposits, respectively. Both grew through acquisitions in the past, as part of a government-approved consolidation of a fragmented sector.
Yet the tone in Ottawa is changing. The government is reviewing the laws governing takeovers. Last month, the head of the federal Competition Bureau, Matthew Boswell, made it clear the regulator is concerned with the growing clout of a few domestic companies. In a speech to the Canadian Bar Association, Mr. Boswell said: “Current provisions enable high levels of economic concentration – even monopolies – in the Canadian economy. This is out-of-step with what other comparable countries are doing.
Lots of filthy Chinese money.
Poll: Is this a competition violation? CompBureau
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Source: macleans - 🏆 19. / 71 Read more »