The proposed merger between the Royal Bank of Canada and the Bank of Montreal (see previous item), which own Canada's largest and second largest broker/dealers, respectively, has caught the attention of the Ontario Securities Commission (OSC). But it is not just merger-related issues that have piqued the interest of Canada's largest and most powerful provincial securities regulator, but rather the hope that turnover from the merger might provide the commission with candidates for its own staffing needs, especially at the very top.
"Since this merger was announced, the thought occurred to us that we might slow down our current employment searches to see what other options might develop," says Jack Geller the OSC's acting chairman.
Both Geller and the OSC's executive director are planning to leave the commission as soon as replacements can be found. The OSC currently has two separate committees scouring the industry for replacements. Reportedly, the executive director search is already down to a short list, including the head of Canada's Deposit Insurance Corp. and the executive vice president of the Canadian Investor Protection Fund.
"But we might decide to wait and see what happens next," says Geller.
Although there have been many mergers between Canadian financial services firms in the past, the proposed merger of two of the Big Six banks is by far the largest. The coupling of those two banks along with their securities affiliates, RBC Dominion Securities and Nesbitt Burns, is subject to a long regulatory review, one that will take months to conclude.
"While top producers know a place will be made for them in the new firm, the same is not true for legal and compliance staffs. Many are looking at their options right now," says a source at RBC Dominion.
Additionally, say many in the Canadian financial services industry, there is a sense that if this merger is approved--and the betting is that it will be--others are sure to follow.
"I'm guessing that there are r‡sum‡s being dusted-off all along Bay Street," says a staffer at the OSC.
Although both top jobs at the OSC have some amount of power and prestige, they are not the easiest posts to fill. Like most regulators, the commission is considered understaffed and underfunded. It also has locked horns on many occasions in the recent past with its overseer, the Ontario Ministry of Finance, over funding issues. And a recent decision by the Minister not to appoint Acting Chairman Geller to a full term has alerted many candidates to the current pitfalls of the job.
"It's a keg of dynamite," says an OSC lawyer.
That's because for the past few years, the OSC has been at odds with members of Canada's mutual fund community over numerous regulatory issues. Many in the industry, including Geller, believe those battles led to his termination.
"Both jobs (chairman and executive director) are a bit of a political football right now. But with all the uncertainty hanging over the private sector, we suddenly have become a much more attractive option," says the OSC lawyer.