Historic Merger of Bank of Montreal and Royal Bank of Canada Creates New Global Banking Powerhouse

The boards of directors of Bank of Montreal and Royal Bank of Canada have announced a definitive agreement to merge the two banking groups, creating a new Canadian-based, internationally competitive bank with a strong North American platform. The merger aims to ensure that Canadians retain a home-grown choice that can compete with the best in the world on price, service, and innovation. The new bank will offer personal and business customers better advice, choices, and service at lower costs, with a commitment to invest more than $7 billion over the next five years in developing state-of-the-art technology.

Key Takeaways:

• The merger will create a Canadian-based, internationally competitive bank with a strong North American platform, allowing customers to access a broader array of financial products through various distribution channels.
• The new bank will have a combined market capitalization of $38 billion and will rank in the top 10 in North America and the top 25 in the world for market capitalization.
• The merger will result in the creation of 18-member Senior Management Committee, including John E. Cleghorn and Matthew W. Barrett, drawn equally from the two banks.
• The new bank will commit to investing more than $7 billion over the next five years in developing state-of-the-art technology and will provide face-to-face service in communities where the banks currently operate.
• The merger requires approval under the Bank Act and the Competition Act in Canada, as well as various other Canadian, US, and international approvals.
• Bank of Montreal shareholders will receive 0.97 of a common share of the merged entity for each common share held, while Royal Bank of Canada shareholders will receive one common share of the new bank for each common share held.
• The merger will lead to the creation of a new board of directors with equal representation from the two founding boards, with Mr. Cleghorn serving as Co-Chairman and CEO of the new bank.

Statistics:

• The new bank will have a combined market capitalization of $38 billion.
• The merger will result in a 45.1% ownership stake for Bank of Montreal shareholders and a 54.9% ownership stake for Royal Bank of Canada shareholders.
• The new bank will have a total of 92,000 employees, serving 17 million customers through 2,850 locations in 40 countries.
• The new bank will have a total of $816 billion in assets, with $624 billion in deposits and $179 billion in loans.
• The merger will result in cost savings of $1.4 billion annually.
• The new bank will have a significant presence in the Canadian and global markets, with a large branch, ATM, and direct banking network.

Sources:

• Bank of Montreal
• Royal Bank of Canada
• "Bank of Montreal and Royal Bank of Canada Announce Merger" (CNW Group)
• "Bank of Montreal and Royal Bank of Canada to Merge" (Bloomberg)
• "New Bank of Montreal and Royal Bank of Canada Merger Creates New Global Banking Powerhouse" (Globe and Mail)