Gord Nixon, the incoming Royal Bank CEO, is expressing caution about the possibility of bank mergers. “Consolidation is inevitable in the Canadian financial services industry, but there will probably not be a mad rush for banks to merge,” says Nixon. He made the remarks in an interview with the Financial Times.

Nixon takes over RBC on August 1. The former dealmaker with RBC Dominion Securities said, “The banks needed more definition around what would be an acceptable merger that would be viewed to be in the public interest.” That definition will take time to develop, he says, although the merger review process itself is now clearly spelled out.

Nixon suggested that running the bank while also attempting to navigate the merger review process would be “pretty tough”. “How do you manage an organization through that uncertain period?”

Nixon said he is not sure the deals that were declined by the federal Finance Minister in 1998 still make sense. “But we and everybody else are evaluating our options.”

He doesn’t necessarily see the point of foreign firms taking advantage of loosened restrictions to take substantial stakes in Canadian banks. “A 20% holding without any kind of confidence in terms of whether that’s a foothold to an ultimate merger or acquisition? I have a hard time seeing the rationale as to why a big foreign bank would want to have that holding,” he said.