* Banks concerned about Toronto as financial center
* TD, CIBC, Scotia, National plan to sign public letter
* Other Canadian financial firms asked to sign
By Pav Jordan
TORONTO, March 9 Canadian banks will declare
their opposition to a proposed $3.1 billion takeover of the TMX
Group (X.TO) by the London Stock Exchange (LSE.L), sources
said, raising a formidable new obstacle to regulatory approval
of the deal.
Four of the country's six top banks have penned a letter
outlining their concern that the deal would hurt Toronto's
ambitions to become a global financial services hub, two bank
sources told Reuters on Wednesday. They spoke on the condition
of anonymity because they were not authorized to discuss the
The TMX operates the Toronto Stock Exchange and the TSX
Venture Exchange for small-capitalizatioin companies.
""Toronto's hopes to be a global financial services hub
could suffer a severe and potentially irreversible setback," a
draft of the banks' letter states, according to a report in the
Globe and Mail newspaper.
Opposition within Canada's powerful banking industry comes
on top of the sharp criticism voiced by provincial lawmakers
since the deal was announced last month.
The four banks that will sign the letter - Toronto-Dominion
Bank (TD.TO), Bank of Nova Scotia (BNS.TO), Canadian Imperial
Bank of Commerce (CM.TO) and National Bank of Canada (NA.TO) -
have no interest in the deal.
The other two - Royal Bank of Canada (RY.TO) and Bank of
Montreal (BMO.TO) - are advising the LSE and the TMX,
National Bank, Scotia Bank and CIBC did not immediately
respond to requests for comment, and TD and declined to
The LSE/TMX deal faces a complex, multi-tiered approval
process at provincial and federal levels.
It has come under heated attack in Ontario, the Canadian
province that is home to the nation's financial hub of Toronto.
A special committee of the Ontario Legislature is holding a
series of hearings on the deal. Officials of two of the banks
will testify on Tuesday.
LSE shareholders would hold 55 percent of the combined
entity - a transatlantic exchange with market capitalization of
about $7 billion. The new exchange operator would have the
largest number of mining, energy and other resource companies
in its stable of listings.
The TMX and LSE say the deal would help Canadian stock
markets maintain their competitive advantage as the global
industry consolidates. That will help companies of all stripes
gain better access to capital, they say.
TMX Group officials could not be reached immediately for
comment on Wednesday.
GMP Capital (GMP.TO), AltaCorp Capital, Canaccord Financial
(CF.TO) and other Canadian financial firms are also being asked
to sign the letter, the Globe said.
(Additional reporting by S. John Tilak; Editing by Frank