Committee rejects merger study proposal

OTTAWA -- A parliamentary committee has voted down a proposal to study the impact of possible mergers between banks and insurance companies, the second rejection of the politically thorny issue in the past two months.

The House of Commons finance committee rejected a proposal from Nick Discepola, a Liberal MP and the committee's vice-chairman, to create a subcommittee to study the matter.

Some MPs said the Liberal majority on the committee argued during a closed-door meeting yesterday that there wouldn't be time to review the complex issue before the summer break. It may still be looked at when Parliament resumes in the fall, although there are concerns that many areas of business could grind to a halt as the Liberal leadership race nears its conclusion.

Mr. Discepola said he thinks the committee may have "blown an opportunity" to study an important and timely issue, but that he won't give up. "I think it'll happen sooner or later, whether we want to close our eyes or put our heads in the sand."

The issue of possible mergers between banks and insurers -- dubbed "cross-pillar mergers" -- was also edited out of the final version of the committee's report on bank mergers.

That report, released in late March, said merger candidates must maintain their level of customer services without raising prices, minimize job losses, maintain loan access for small and medium-sized businesses, and guarantee existing services for rural communities. But it said nothing about cross-pillar mergers.

A parallel Senate committee report, meanwhile, gave an enthusiastic endorsement of bank mergers. The chairman of the committee also heartily endorsed cross-pillar mergers.

Pierre Paquette, a Bloc Québécois MP who represents the riding of Joliette and also sits on the Commons finance committee, said he doesn't understand why most of the Liberals on the committee voted against yesterday's proposal. "Some Liberals don't want to talk about this."

Only Mr. Discepola and Mr. Paquette supported the motion.

Sue Barnes, the committee's chairwoman, couldn't be reached late yesterday. But she has said in recent weeks that the committee will be too busy this spring to review a complicated issue such as cross-pillar mergers.

Mr. Discepola said he's also hopeful that the issue could gain some momentum when Finance Minister John Manley responds to the committee's report on bank mergers. Mr. Manley's response is expected in about six weeks.

Mr. Manley said recently that he did not expand that request to the committees to review the issue because "there was no great wish to see changes to the rules in general with respect to cross-pillar mergers."

Ottawa's official policy is that bank mergers are legal but require approval from the Competition Bureau, the Office of the Superintendent of Financial Institutions, and the federal government. Cross-pillar mergers, however, are contrary to policy.

The Globe and Mail reported earlier this year that Manulife Financial Corp. had held talks to acquire Canadian Imperial Bank of Commerce.