Brokerage activities following legislative revisions

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brokerage activities. Following legislative revisions in 1992, Canadian banks were allowed to enter the trust business through the establishment or acquisition of trust companies. Since then, most trust companies have been purchased by Canada‘s largest banks. As a result of all these legislative changes, the Canadian four distinct pillars of financial services have now converged into one single market place. Legislative changes in 2002 provided for further increases in the range of business powers available to Canadian banks. For example, they were allowed to own finance companies. The structure of the financial industry in other countries In the United States, following passage of the Gramm-Leach-Bliley Act (1999), banks - through financial holding companies - are now permitted to offer securities products (with restrictions on how these are offered) and insurance products (for non-bank subsidiaries of financial holding companies). This allowed U.S. securities firms and insurance companies to purchase banks, and banks were able to underwrite insurance and engage in transactions involving securities and real estate. In Europe, there is a universal banking system, in which there is no separation, and commercial banks provide a full range of banking, securities, real estate, and insurance services, all within a single entity. The structure of the banking industries differs greatly across countries, ranging from non-concentrated in a few nations (the United States and Germany) to highly concentrated in about half of the nations in the study cited in footnote 11, for example Australia, Belgium, Canada, France, the Netherlands and Sweden[1]. [1]
Consolidation in the financial industry In the last few years, there has been an increasing number of financial mergers and acquisitions in advanced countries. Most of the financial consolidation cases that increased rapidly in the late 1990s were mergers and acquisitions within the same industry, especially the banking industry in each country. Recent legislations in Canada and the U.S. have stimulated consolidation in the banking sector. IT and web technologies are also providing a favorable environment for consolidation. Under the influence of these factors, banking institutions are expected to become not only larger, but increasingly more complex organizations, engaging in the full range of financial service activities, taking advantage of economies of scale and economies of scope. Theoretically speaking, new technological developments might encourage consolidation because of their high fixed costs and the need to spread these costs across a large customer base. At the same time, dramatic improvements in the speed and quality of communications and information processing made it possible for financial service providers to offer a broader array of products and services to larger numbers of clients over wider geographic areas than had been feasible in the past.

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