March 9, 2006 by Canadian Underwriter
Shortly after Royal Bank CEO Gordon Nixon decried the “absurdity” of Canada’s Bank Act, referring to the act’s provisions that prevent banks from retailing insurance within their local branches, National Bank of Canada president and CEO Ral Raymond told his shareholders the act’s restrictions are “anachronistic and unjustified.”
“The regulatory framework imposes serious limits on our insurance strategy and our ability to participate in ongoing consolidation within the insurance industry,” Raymond said in a recent speech to the National Bank of Canada’s annual shareholders meeting. “That our clients cannot obtain information on insurance products in bank branches and are unable to benefit from an integrated product offering that includes insurance is entirely anachronistic and unjustified.”
Raymond made his remarks while noting that the bank’s sizable wealth management business, which has increased by about 10%, is a high-growth area where the bank occupies a position of strength, particularly in Quebec.
Raymond says the bank’s loan insurance, life and health insurance, and property and casualty insurance activities are another success story, and the bank “is keen to continue its deployment of this business in order to further benefit from economies of scale.”
Raymond is the second bank CEO within a week to criticize the act for disallowing banks from retailing insurance within their local branches. The Canadian government is currently contemplating its required review of the Bank Act. The Liberal Government announced last year it would shelve discussion about reforming the Bank Act until after the federal election in January 2006. Since then, the new minority Conservative government has promised to leave the restrictions in place.