Nee: aes ery ai te iT ” ar w Merger makes bank stronger R.S. (Rod) Pennycook Contributing Columnist NOEL Wright’s recent column entitled “Don’t bank yet on mega- banks” poses the ques- tion is “big better? And for whom, precisely?” 1 thought: vour readers might appreciate a response from one of the participants. While many Rnancial indus- iry experts agree thar the merger of Canada’s largest and oldest financial institutions will create a more globally compet- itive Canadian-based bank, Most consumers are rightly asking “What's in it for me?” The answer is important to alt Canadians. Mr. Wright is quoted as saving that “if the mergers go through, the two merged mega-banks will control 60- 70% of Canada’s core banking assets” leaving the impression that there is littte, if any, com- petition in the financial ser- vices industry in Canada today. These figures are not only inaccurate but also fail to men- tion the hundreds of other ‘companies that provide Canadians with financial ser- vices. According to — Statistics Canada and other publicly available sources, the four banks mentioned now have a 31% share of all domestic assets within the private Canadian financial services sector. Mr. Wright asks how the average consumer will benetic from these proposed mergers. With a large customer base and = greater — technological scale, the new bank will be able to lower banking costs for con- sumers by reducing some ser- vice fees and climinating some others altogether. One example is through a reduction of some $30 million a year in charges when Royal Bank and Bank of Montreal combine automated banking machine networks. Right now, customers of one bank pay a fee when they use the machine of the other. That tee will he eliminated. In communities where cach of our two banks has a branch in close proximity to one another, a bigger branch may need to be built that can accommodate the staff and customers of both banks under one roof, while allowing for new services and staff to be added in areas such as trust and investment services. In locations where our two banks may not have had sufii- cient business alone to justily a continued branch presence, our combined business. will allow us to remain in many more communities. In the communities across Canada where cither Royal Bank or Bank of Montreal is the only bank, we have pledged that the new bank will keep those facilities upen with no job losses — this is a mini- mum five-year commitment. With respect oto Mr. Wright’s speculation on job losses, our chairman has per- sonally communicated the ee ee EE bank’s commitment to our employees that where reduc: ons are necessary, it will be handled almost exclasively through normal retirement, voluntary turnover and trans- ters, with retraining where nec- essary, to other areas of our Operations. We expect to hire as many as 20,000 to 30,000 people during the three to five year integration. We expect our new bank’s contributions to charitable organizations, education, health care and research caus- es, will be even superior to what it is today. We project our combined bank’s level of Canada-wide donation sup- port to reach $250 million over the next five years. In B.C. fast year Reval Bank donated over $1.6 mil- lion to focal charities, with our employees contributing a fur- ther $1.5 million. Our 1997) United Way Campaign in B.C. was Royal Bank Financial Group’s most successful ever, with a total donation of $1.2 million, ben- efitting hundreds of communi- ties including many here on the North Shore. In addition, Royal Bank, North Shore donate:} more than $50,000 Iast vear to a variety of nonprofit organiza- tions including Lion's Gate Hespital, Family Services of the North Shore and North Shore Harvest project. And last, but by no means least, we strongly believe our sharcholders will welcome our decision, because they will be owners of an outstanding bank. That impacts many millions of ordinary Canadians who own our shares directly and through their mutual funds and pension plans. They depend upon vibrant growing corporations for their future security and well being. This proposed union of two Canadian banks is, then, about combining complemen- tary strengths. [t's about growth, not contraction. It’s about adding, not reducing our capacity to compete. If we neglect any market segment by allowing service to deteriorate or lower the value we provide our customers to diminish, we will not meet our objective of being the premiere financial services group in Canada. T can assure you we have no intention of deviating from this goal, — RS. (Rod) Pennycook is the senior vice-president and general manager for the Royal Bank of Canada British Columbia Wednescay, June 24, 1998 — North Shore News — 17 FT a Se Panasonic. 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