For All Nails #140: Really Boring Stuff
by Noel Maurer
- From The Statist
- 22 February 1972
Even as its battered neighbour scrambles to repair its economy, North America continues to reform its own time-tested model. Last year it liberalised the stockmarket, sold off NFA holdings, and invested in new infrastructure. Now it has set its sights on the banks: the reforms announced on February 17th, though hardly sweeping, may make CNA '72 tough to beat.
The government hopes that by easing restrictions, as it has long been expected to do, it will accomplish two things: improve the management of the banks, and expose them to a little more competition from foreigners . . . to encourage better management, the government will make it easier for foreigners to invest in domestic banks. A 49 percent limit on foreign ownership has been scrapped, and, although takeovers are off limits, friendly stakes by foreign banks will now be welcome.
In case all this is not enough to shake up banks' boardrooms, the Finance Ministry will gain more powers to nudge them along. Instead of merely approving new directors, it will now decide whether they deserve reappointment every couple of years. In announcing the new measures, the government also hopes that the five big local banks will merge themselves into bigger entities . . . the Finance Ministry says it will not force mergers.
Local banks will also face more competition for retail customers and commercial loans. A new category of licences will allow foreign banks to open up a handful of branches. To avoid going overboard, the government will issue only six such licences between now and 1973 . . . foreign banks, which cannot engage in retail business, will also gain a little more wiggle-room. They will now be allowed to lend up to N.A. £500 million to local companies, up from N.A. £100 million before.
These changes will hardly reshape the face of North America's banking sector. But that is not the point. Local consumers would probably benefit from even more competition than the Monaghan government is allowing, but they will benefit a bit nonetheless. And since they are already better-off than their counterparts in neighboring Mexico, they will not complain. Nor will foreign bankers, who delight in greater opportunity to invest in North America's phenomenal wealth, stability and financial promise.
Forward to FAN #141 (Statist): More Really Boring Stuff.
Forward to 13 March 1972: A Chingazo.
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