(February 7 – 18:10 ET) – Under the new financial services reform bill, the Minister of Finance may recategorize former Schedule I banks with equity of less than $5 billion to allow them to be closely held.
Today the Department of Finance issued guidelines setting out the framework for review of a transaction involving such a recategorization. Any recategorization will be considered on its own merits, and “should demonstrate that it would foster opportunities for the bank to grow and better serve the customers of the bank”.
In deciding whether a recategorization is in the public interest, the minister will consider the business case and objectives of the proposal.
Also taken into consideration will be the impact of the proposed transaction on:
- the safety and soundness of the bank;
- direct and indirect employment;
- the location of the management of the bank;
- the needs of consumers;
- the needs of the businesses and operations of the bank; and
- the prospects for the bank in the context of the global marketplace.
Finally, the minister will also consider the best interests of Canadians and, where the bank operates principally in one region, the best interests of those living in that region.
If the minister signs off on a recategorization, then the bank would be required to seek a special resolution of shareholders (two-thirds vote) and an approval by a majority of the directors.
-IE Staff