To the Editor:

An article on the proposed merger of Bank of Montreal and Royal Bank of Canada ("Canadian Government's Fears of Concentration Seen Threat to Megadeal," Feb. 12, page 20) contains errors of fact and interpretation.

First, in calculating an "almost 40%" market share for two banks combined it is misleading to use only assets held by chartered banks. The chartered banks represent 46% of the assets of the total Canadian financial services market, and the merged institution would hold less than 20%. The banks compete with some 3,000 other financial institutions, including trust companies, credit unions, finance companies, leasing companies, and life insurance companies.

Second, the story states that the merged bank would have a combined market share "beyond the 30% threshold Canadian regulators have traditionally been willing to accept." As noted later in the story, the Competition Bureau has traditionally used a 35% "safe harbor" threshold of concern. Even market shares exceeding 35% may be seen as benign, depending on the particular facts.

Finally, the Ministry of Finance never "shot down" a proposed merger of Canadian Imperial Bank of Commerce and Canada Trust Co., as stated in the story. Such a proposal was never officially placed in front of the finance minister or any other government official for a ruling.

There were unconfirmed reports that CIBC privately asked the finance minister for his opinion, and he said it would be premature to comment before a report by Canada's Task Force on the Future of Financial Services, expected in September. This is exactly what the minister has told Bank of Montreal and Royal Bank.

David Moorcroft

Vice president, public affairs and corporate communicationsRoyal Bank of CanadaToronto

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