Canadians warming to, but 50% still oppose bank mergers: poll

THE CANADIAN PRESS
OTTAWA - More Canadians appear to be warming to the idea of bank mergers, but half of those polled recently were still unwilling to give the federal government the green light to approve them.

A new Canadian Press-Harris/Decima poll found that 50 per cent of those surveyed were opposed to letting Canada's chartered banks combine forces in order to become larger global players.

That's considerably less than the 60 per cent or more who said they opposed mergers in recent years.

On the other side, a sizable minority (37 per cent) said in the Canadian Press-Harris/Decima survey conducted last month that it makes sense to allow mergers and allow the banks to become larger and stronger, given changes in financial markets.

Pollster Bruce Anderson said one reason for the continuing antipathy towards mergers in Canada is that respondents do not see the argument that bigger is better working in the United States or Europe.

"Canadians occasionally show frustration with the country's large banks, but more commonly like the combination of security and the service they provide," Anderson said.

"There is still a broad sense that there might be consumer downsides, and little belief that bigger banks in the U.S. and Europe offer something better for consumers than Canadian banks do."

In fact, only seven per cent felt U.S. banks offered better service, the same number as for European banks. Meanwhile, 26 per cent felt Canadian banks were superior to their American counterparts, and 12 per cent felt they were better than European banks.

In 1998, Paul Martin - then Liberal finance minister and later prime minister - rejected the proposed mergers of the Royal Bank of Canada with the Bank of Montreal, and of the Canadian Imperial Bank of Commerce with the Toronto-Dominion Bank, saying they were not in the public interest.

Since, the idea of bank mergers has sporadically been resurrected by economic think-thanks and the banks themselves. But no finance minister has touched the combustible subject and Conservative Finance Minister Jim Flaherty has repeatedly said reconsidering the policy was not a priority for him.

The Harris/Decima poll found that men, those under 25 years of old, individuals with incomes over $100,000 a year and Liberal Party supporters were most likely to support bank mergers.

As well, resistance to mergers was highest when individuals asked to consider the possibility of the institution where they currently bank merging.

The telephone survey of 1,000 Canadians was conducted between May 22 and May 26 and is considered accurate plus or minus 3.1 percentage points, 19 times out of 20.

The poll was conducted as Canada's banks were preparing to release their latest quarterly reports.

The combined profits of the six biggest banks tumbled to $2.47 billion in their fiscal second quarter, down from $4.7 billion a year earlier. All the banks had lower profits but only Canadian Imperial Bank of Commerce (TSX:CM) had a loss.

© The Canadian Press, 2008