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Lecture

ADMS 1010 Lecture Notes - Consumer Protection, Investment Banking, John Cleghorn


Department
Administrative Studies
Course Code
ADMS 1010
Professor
Rebecca Jubis

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RBC
It was one of the most profitable banks in the world.
Offering personal commercial banking, wealth- management services, insurance, corporate,
investment banking and transaction processing services. Later realigning its 5 business
segments into 3. Revenue
The first segment is Canadian Personal and Business, which include banking and investment
business and global insurance business. E.g. deposits, investment, debit and credit cards,
mortgage, loans, insurance service.
The second segment is the U.S and international Personal and Business Group. E.g. RBC’s
banking and retail brokerage business in U.S, and private banking internationally. And also
wealth- management activities of RBC Dain Rauscher.
The third segment is Global Capital Markets which provides financial products and services to
clients, corporations, and governments. E.g. debt, equity, foreign exchange.
Government
Mandates a 10% capital on ownership for any single entity.
It had an impact on the financial- services industry, and affect the strategy of the banking
system.
Politicians actually didn’t help with the overall financial performance in the market. Their best
interest was just to balance national and their political career. This made the issue become a
political one.
Failed Merger Attempts
John Cleghorn (CEO of RBC) negotiated a merger with Matthew Barrett (CEO of BMO) to compete
with the global rivalry.
Government and the public against mergers. It is because they think that the banks were already
too big, too power.
If the Mergers fail, it creates a problem of too big to fail.
MacKay Report: There should be no ban on mergers. It called for strategies to enhance consumer
protection, suggestions for creating more competition and allowing more activity from foreign-
owned banks.
Ianno Report: comments that mergers would result in larger-scale job losses, reduce consumer
choice, and concentrate too much political and economic power.
This results the failure of the RBC-BMO merger attempt. Reasons: giant institutions would be
created, raise anti- trust issues to lead to higher prices and lower level of service, decision-
making power on credit allocation in too few hands.
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