Federal Move to Reject Bank Mergers Wins N.S. Support

Nova Scotia's minister of finance voiced support today for a federal decision to turn down proposed bank mergers. Don Downe said he is pleased the federal government said no.

"Our own submissions to the Senate committee on banking a few months ago warned that the costs of the mergers would likely outweigh the benefits," said the finance minister.

In a submission to the committee in September, Mr. Downe wrote:
"I am concerned that increased concentration in the banking industry could result in pricing and product service behaviour harmful to consumers and small and medium-sized businesses."

Using analysis and assumptions provided by the Bank of Nova Scotia, the provincial submission calculated the possible loss of more than 300 jobs and the possible closing of a quarter of the bank branches in the province.

Today, federal Finance Minister Paul Martin released reports on the mergers and a statement that rejected the mergers as proposed. In the federal analysis, Nova Scotia was one of five provinces where the mergers would likely have had an adverse effect on competition.

"I believe it is critical for Nova Scotia consumers and businesses that we have more choices and competition in financial services, not fewer," said Mr. Downe. "Small businesses are already hard-pressed to find low-cost sources of capital. Allowing bank mergers would have made this task even more difficult.

"Paul Martin has followed the advice of those who objectively studied the proposals. I am pleased that he has done the right thing."