Bank Mergers in North America: Comparing the Approaches in the United States and Canada

The Transnational Lawyer, Vol. 18, p. 245, 2005

12 Pages Posted: 10 Oct 2013

See all articles by Eric J. Gouvin

Eric J. Gouvin

Western New England University School of Law

Date Written: 2005


This Article provides a summary comparison of the processes in the United States and Canada for governmental approval of bank mergers. The topic came to prominence in 1998 when four of Canada's five largest banks unveiled plans that would have resulted in the Royal Bank of Canada merging with the Bank of Montreal and the Toronto Dominion Bank combining with the Canadian Imperial Bank of Commerce ("CIBC"). These proposed mergers were rejected by the then Finance Minister, Paul Martin. The reasons given included: (1) the resulting banking industry structure would have concentrated too much economic power in the hands of too few financial institutions; (2) the combinations would have reduced competition in the Canadian financial services sector; and (3) the reduction in the number of banks would have reduced the Canadian government's flexibility to address future concerns.

Although the government rejected the 1998 mergers, the Finance Department in 1999 acknowledged that business combinations could be an appropriate business strategy in some circumstances. The government promised guidance as to when such combinations of large banks would be permitted. In 2001, the Department of Finance set forth its broad outlines for bank merger policy. One of the obvious differences with U.S. law is that the Canadian approach explicitly provides that the views of the public and political leaders are to be incorporated into the merger approval process. Since the issuance of the bank merger policy, the government has promised specific guidance about what types of combinations will be permitted, but it has yet to complete that policy document.

This Article provides a comparison, in summary form, of the U.S. and Canadian approaches to the approval of bank mergers. It starts with a brief explanation of U.S. bank merger law and then lays out the evolving Canadian approach to large bank mergers. It concludes with a discussion of whether the Canadian approach will help the regulators of Canadian financial institutions address the deficiencies identified in the 1998 transactions.

Keywords: Canada, United States, bank mergers, mergers and acquisitions, banking law, financial regulation, banking regulation

Suggested Citation

Gouvin, Eric Joseph, Bank Mergers in North America: Comparing the Approaches in the United States and Canada (2005). The Transnational Lawyer, Vol. 18, p. 245, 2005, Available at SSRN:

Eric Joseph Gouvin (Contact Author)

Western New England University School of Law ( email )

1215 Wilbraham Road
Springfield, MA 01119
United States
(413) 796-2031 (Phone)
(413) 796-2038 (Fax)


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