“The Department of Finance is considering legislative measures to prohibit the acquisition of control of a large bank by another large bank and their amalgamation, subject to prudential or financial stability exemptions,” the paper said.
The Bank Act defines large banks as those with at least $12 billion in equity. As such, the provision would not have applied to the proposed acquisition of Canadian Western Bank by National Bank of Canada, nor the recently completed acquisition of HSBC Bank Canada by Royal Bank of Canada.
As of Oct. 31, 2023, Canadian Western Bank’s equity was $4 billion. As of Dec. 31, 2023, HSBC Bank Canada’s equity was $7 billion.
Federally regulated financial institutions (FRFIs) that wish to enter Canada, merge or change ownership must apply for ministerial approval. Finance is seeking feedback on whether and how FRFIs should hold public consultations as part of these applications.
Further, Finance wants to clarify that the minister can consider an applicant’s compliance with regulatory requirements, such as those related to anti-money laundering and taxation, in its assessment.
Banks that choose to close branches may also have to explain why publicly and facilitate account transfers to rival institutions. Among other things, Finance is seeking feedback as to whether banks should be required to share data about the closing branch — such as how its transaction volume compares to an average branch — as well as whether a bank must waive transfer fees when it closes a branch.
The paper also requested feedback on proposals related to consumer protection. Among them:
- Requiring banks to prevent or delay transactions believed to be fraudulent
- Requiring banks to allow consumers to disable banking functions to prevent fraud, such as wire transfers
- Introducing a maximum liability threshold for victims of unauthorized transactions
- Increasing the amounts available to customers immediately when cashing a cheque in person
Foreign interference, AI
Finance is also contemplating legislative reforms designed to beef up security for the financial sector.
“As the threat landscape changes and new risks emerge, the federal government is considering action to ensure that its tools keep pace to protect Canadians and the Canadian financial sector,” the paper said.
Earlier this year, the Office of the Superintendent of Financial Institutions (OSFI) adopted new guidance designed to improve safeguards against potential foreign interference in the domestic financial system — namely, foreign government efforts to manipulate or corrupt industry firms and personnel. That came in the wake of legislation that expanded both Finance and OSFI’s powers to deal with such threats.
Finance is now considering establishing a more formal structure to oversee national security risks to the financial sector that would co-ordinate consultations and facilitate information-sharing between regulators and government authorities with…
Read More: Feds could outlaw large bank mergers
