Mr. Speaker, we will not be seeing foreign banks on every street corner as we do our Canadian banks. The new full service foreign banks are restricted to taking deposits of $150,000 and up, so that will eliminate the everyday person who does not have that kind of deposit to make. Basically that is out of reach for the vast majority of Canadians. They would cater to those individuals who receive the largesse of the government.
New lending banks will not be permitted to accept deposits or borrow except from other financial institutions. It is hoped that these foreign banks will serve as sources of funds for both small business and credit card users.
Both the full service and lending branches will be allowed access to Canada's clearing and settlement system with the approval of the Bank of Canada. An analysis of the bill would show that there will be more choice, but for the most part choice is limited to businesses and wealthy Canadians.
The reality is that few foreign banks have any interest in coming to Canada to set up expensive brick and mortar branches on the main streets of our communities. In today's world of e-commerce banks want to compete electronically. However the average retailing banking customer will benefit from the trickle down effect.
More banks will be fighting for business customers which means that more money will be available for customers. If the banks lose some of their small and medium size customers they will be more competitive going after the average private consumer.
Most other countries in the world allow direct foreign banking. The Liberal government has been promising the same for Canada since February 1997. It has taken two years to introduce the legislation. We are pleased to see it is finally here today.
As mentioned the World Trade Organization has been the impetus for these measures as there is a June 1999 deadline to comply with the agreement.
Some of the most ardent protectionists believe that we must protect Canadian banks. They believe that Canadian businesses cannot compete without protection. This attitude has been one of the factors in the drop in Canada's productivity over the last 20 years. In today's global economy it is crucial for all sectors of the Canadian economy to compete internationally. That includes facing foreign competition at home.
It was less than 20 years ago that foreign banks were allowed to have any access at all to the Canadian market. However these banks have had to set up separate Canadian subsidiaries that were not connected to their parent banks in terms of capital, governance and accounting.
There has not been a steady growth in foreign banking activity in Canada. In 1987 there were 59 foreign banks operating in Canada. Last year there were only 45. In 1990 foreign banks had a 12% share of total banking sector assets. Last year that was down to 10%. This means that Canadians and Canadian businesses have been deprived of a large pool of capital. How will foreign banks react to the legislation? Only time will tell.
While the protectionists rail against the entry of foreign banks, we in British Columbia have been living with the largest subsidiary of foreign banks for over a dozen years. The Hongkong Bank of Canada was incorporated in Canada on July 1, 1981. It rose to prominence in western Canada in 1986 when it acquired the Bank of British Columbia. With this acquisition the Hongkong Bank of Canada went from being the 20th largest bank in Canada to the 9th largest bank.
In 1988 the Hongkong Bank of Canada bought Midland Bank Canada and in 1990 it acquired the Lloyds Bank Canada. These last two acquisitions provided the Hongkong Bank with retail branches across most of the country.
Despite the name, the Hongkong Bank of Canada is a subsidiary of HSBC Holdings of London, England, the fifth largest bank in the world. The Hongkong Bank of Canada is the largest bank in Canada and is headquartered in British Columbia. Both the chief operating officer and the senior executive vice-president were educated at the University of British Columbia. Thus many British Columbians have more attachment to this bank than they do to the Canadian banks headquartered in Toronto.
The Hongkong Bank of Canada is a good corporate citizen. In British Columbia some of the events it sponsors include the Whistler Winterstart Festival, the Okanagan Wine Festival and the Yuletide Lights of Hope fundraiser for the B.C. Children's Hospital.
More important, it has generally provided good banking services to its customers, both individuals and businesses, but what is most intriguing about the Hongkong Bank of Canada is that it has gone international with offices in Seattle, Washington and Portland, Oregon. This is the future of banking, banks that transcend borders in a global economy.
In summary, the official opposition supports the legislation even though it took the government more than two years to get it before the House of Commons. We support it because in the long term the presence of foreign banks in Canada will benefit all Canadians. Canadians should never fear foreign competition. We should have enough confidence to realize that we can compete in today's global economy.
If we could just get the Liberal government to dump its high taxation policies, Canadian business could be at the forefront of the global economy instead of trailing along behind. Bill C-67 is a good step in the right direction, but the government has a long way to go.