Bankers and the merge urge

Like most Canadians, I have witnessed the persistent argument by our banking industry that banks simply must be allowed to merge if they are to survive in the new global economy. Scale, they insist, is now essential for success. I was, therefore, surprised to read in The Globe and Mail that our still unmerged banks are the most profitable in the world.

Over the past five years they have provided their shareholders an annual return of 15.5 per cent, better than those of any other country. American banks, often the model for their counterparts here, managed a measly 5.8 per cent. And things are getting better. Four of the banks posted record profits in 2005. Three, Bank of Nova Scotia, Royal Bank of Canada and Bank of Montreal, were among the world's top ten stock market performers.

The banks' "bigger is better" policy seems designed less for the benefit of shareholders and more for the sating of CEO egos.