The two competitors faced each other across the reproduction partner’s desk with its drawers symbolically on both sides, the kneehole clear through. Behind the desk, Germain Perreault, 63, the chairman, chief executive officer and president of Bank Canadian National and former page boy at the Montreal Stock Exchange. Facing him, Michel Bélanger, 49, president and chief executive officer of the Provincial Bank of Canada, former president of the Montreal Stock Exchange. It is May 4, and Perreault, the wise old owl, is blinking and basking in the bright light of his own idea: merger. Surprise spreads across Bélanger’s rugged face like sudden sunlight on the Laurentian shield. The 15-minute meeting ended at 9 a.m. that Friday, setting in motion eight weeks of secret talks among a handful of people, as the only two Canadian chartered banks where the officers operate in French planned to merge. As details were released last week, the new bank (if approved, as is likely, by Finance Minister John Crosbie and shareholders) will be the sixth-largest bank in Canada.
To be called the National Bank of Canada, it will have assets of $14 billion, about 15,000 employees and 23,700 shareholders with, after consolidation in five years, between 625 and 700 branches, including up to 140 outside Quebec.* The proposal had begun with a brief phone call from Perreault requesting a meeting in his office the next day. There, in the corner suite, with its leather chairs, Chinese vases, Lalique crystal decanter and glasses, and the sixth-floor view of Montreal’s historic Place d’Armes and Notre Dame Church, Perreault rambled a bit about longterm planning, then got to the point: “We have questions to ask each other. Would it profit us both to merge our banks?” Bélanger took a moment to recover: “I don’t know what to answer. It’s a good idea, but I need time to think about it.”
They agreed to talk again in 10 days, and after further conversation, Bélanger left for the three-minute walk west on St. James Street to his office. Recalls Bélanger: “I thought: ‘It’s a crazy idea, but so what?’ ” Certainly, Perreault was convinced: “Things like that, I think
about very quietly and slowly. In banking, no take-overs are possible; it’s mutual consent of both parties.” But, while Perreault may have decided that merger was both the route to growth and the way to fight the caisse populaire movement in Quebec (which has more money on deposit than all the banks combined), Bélanger wasn’t so sure.
He talked with his chairman, Léo Lavoie, about two worries: giving away markets to a competitor and, secondly, whether or not the personnel and expertise of the two banks were compatible. Looking at lists of the two banks’ branches, Bélanger was amazed to discover there were only 12 Quebec communities where the two were the only two in town. In most cases, even if the two were combined into one, another bank was available for consumer choice, he concluded. Further, there were those costly overhead expenses that would be chopped and the increased clout the new bank would have in areas outside Quebec. After a trip to Western Canada, Bélanger talked with his chairman again on May 15. Both had reached the same conclusion: merger was the right move, right now. Perreault came to Bélanger’s office on May 17. “We have to do this quickly,” Bélanger told him, “and without any slip or embarrassment.” Because confidentiality was
needed, they couldn’t keep meeting, so each appointed a lawyer to negotiate the deal. For Provincial, it was board member Claude Ducharme, of Desjardins, Ducharme, Desjardins & Bourque. For BCN, it was board member Philip Vineberg, of Phillips & Vineberg. They first met May 25. The inspector-general of banks was consulted, offered no negative view, and so the two lawyers prepared a four-page letter of intent and an eight-page merger contract as required by the federal Bank Act, along with ap-
*The Toronto-Dominion, smallest of the Big Five banks, has assets of $25 billion and 1,000 branches, 100 of them in Quebec.
pendices listing, among other things, the 48 board members.
Perreault, Bélanger, Vineberg and Ducharme met for lunch June 18 in a room at the Hotel Ritz-Carlton. It was a hot day, so the meal was light—salad, fruit and cottage cheese—as wording was rendered final. Executive officers were named: BCN’s Perreault would be chairman, Provincial’s Bélanger would be president and chief executive officer, Léo Lavoie, vice-chairman, and Perreault’s No. 2 man, Jacques Douville, executive vice-president and chief general manager. Agreement, by that time, was relatively simple. “You have to go around the rink a couple of times,” said Bélanger, “but it’s not all that difficult.” Points out Perreault: “I’m older, the time has come for me to stop being president.” Bélanger sees little change in his power, although he admits there will be much more work. “A chief executive officer is a chief executive officer. Under one chairman or another it doesn’t matter. It’s just a case of a different personal relationship.”
On June 27 notice went to directors of the two banks to attend separate, special board meetings about merger with an unnamed bank. Directors flying from Quebec City to Montreal for the respective Friday afternoon meetings soon knew which one it was when they saw directors of the other francophone bank on the same plane, also flying to a special meeting. There was, however, no opposition. Merger had been coming a long while. A decade ago, discussion reached the board level, but went no further for reasons no one can recall today. “It’s a logical step, but you don’t exclude the emotional part,” says Perreault. “This was a hidden desire of many people.” Still to be settled are questions such as which building will be used for head office (Provincial plans to proceed with its announced office tower in the $100-million, two-building complex with Bell Canada in Montreal); further senior officer appointments; and which charge card will be honored (likely both Visa and Mastercharge). With the seal of approval from the minister of finance expected this month, special shareholder meetings likely in August, and final federal cabinet approval to follow, the new bank should be operating Nov. 1, doing about seven per cent of the chartered bank business in Canada. Will the merger work? Bélanger quotes George Bernard Shaw’s rejoinder to Isadora Duncan when she suggested that he be the father of her child: “You have the greatest mind, I have the most beautiful body. Therefore let us produce the perfect child.” Replied Shaw: “Suppose the child was born with my body and your mind!” Comments Bélanger: “That’s the risk we’re taking.”cÿ
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