Scotiabank's Waugh Favors LSE Purchase of TMX If Governance Issues Weighed

Bank of Nova Scotia (BNS) Chief Executive Officer Richard Waugh said he favors the acquisition of TMX Group Inc. (X) by the owner of the London Stock Exchange as long as governance and Canada’s national interest are protected.

“My hope is that this deal goes through with some modifications that do protect national and regional interests,” Waugh told reporters at the annual meeting of the Inter-American Development Bank in Calgary today. “They have to negotiate and find solutions.”

Issues of corporate and regulatory governance need further negotiations before the deal should be allowed to proceed, Waugh said. Regional exchanges are important in times of crisis, such as the one Egypt, where the reopening of banks and financial markets was a sign of a return to normalcy, he said.

Canada’s banks, which are usually united on most policy issues, are divided on the proposed C$3.2 billion ($3.3 billion) transaction amid concern about job losses and surrendering regulatory control of the securities industry. Scotiabank, Canada’s third-largest bank, is the last of the nation’s six biggest banks to voice an opinion on the transaction.

Toronto-Dominion Bank (TD), Canadian Imperial Bank of Commerce and National Bank of Canada (NA) said they oppose the sale to the London Stock Exchange Group Plc. (LSE) Royal Bank of Canada (RY) and Bank of Montreal (BMO), which are advising on the deal, support the combination.

“I am head of Canada’s most international bank,” Waugh said. “It’s a very fine line of looking after true national interest and overreacting in a protectionist way. These transactions should get done. It is an important issue.”

The banks opposing the transaction released a letter March 9 outlining their concerns, saying Canada’s clout as a center for mining and energy trading may be diminished.

The transaction is “not the same as two mining companies getting together,” Waugh said. “I think that has to be recognized by all participants including the two that are negotiating.”

Bank Lowers Credit Card APRs for Some, but Adds Fee for Others

The cat and mouse game continues. Americans are beginning to reap more of the benefits of 2009's landmark credit card protection legislation, the CARD Act, even as some banks continue to add fees. The Act ordered banks to review credit card customers' files to determine if their interest rates should be lowered. According to this National Public Radio story, it's apparent that at least one of the "big four" banks -- Bank of America -- is cutting some high-value cardholders' interest rates by as much as half, even as it adds $59 annual fees to customers who are least likely to be able to get another card from a different issuer.

"The divide that's dividing the haves and have-nots has gotten even bigger," Curtis Arnold, founder of CardRatings.com, tells WalletPop. "As we come out of this credit crunch, my concern is it's almost like a disappearing middle class. That's a concern to me as a consumer advocate, because millions and millions of consumers fall into this category," he says.

As per the CARD Act, a hike in someone's interest rate has to be followed six months later by a review to determine if the raise is still justified based on the cardholders' payment history and credit score. What this means for consumers is that if you missed a payment and watched your APR soar into the stratosphere, you could have a light at the end of the tunnel. Right now, the numbers aren't great; according to one analyst cited, only 2% of Bank of America's credit card customers have been granted a rate reduction.

There also are some indications that customers are getting their rates lowered, but only by a percentage point or two. Furthermore, since banks don't have to publicize the details of who's been granted a lower rate, it's possible that they could be going to people who don't generally carry a balance. This would, of course, make for good press without really helping any of the Americans struggling to pay their bills.

To add insult to injury, the Los Angeles Times reports that Bank of America is adding a new $59 annual fee charged to 5% of its credit card holders starting next month -- and the paper claims the 5% are those who can't afford to pay off their balance or go someplace else to get a new card. Of course, a Bank of America spokesperson points out, these people could close the card and avoid the fee, but if the card in question is their only or primary line of credit, this could damage their credit scores, making it even harder to get credit again in the future. The Times reporter, David Lazarus, blasts Bank of America in his article, saying, "Introduction of an annual fee thus skirts the law by allowing a bank to milk extra revenue from an account without raising rates."

Arnold also says banks aren't playing fair. "It's a catch-22. You can't rebuild credit if no one will give you credit, and that catch-22 is stronger than it's ever been. Honestly, my interpretation is the banks still hold all the cards."