TARA PERKINS

Globe and Mail Update

March 31, 2009 at 9:49 AM EDT

Prime Minister Stephen Harper gave Canadian banks some unsolicited advice on the pages of the Financial Times Tuesday, saying that they should capitalize on the relative strength of their balance sheets by acquiring assets abroad.

“I’m not going to try running banks, but I hope our banks will see this as an opportunity to build the brand - the country’s brand, their own brand – and to expand their scope and profitability over time,” Mr. Harper is quoted as saying in a front-page story.

“I can assure you that the steps we’re taking in the financial sector will not be designed to promote greater protectionism,” he added.

Mr. Harper said the banks should be looking to buy assets in the U.S. and other countries, and that he would support such efforts as “an opportunity for Canada to expand its role in the world financial sector,” the article said.

The Prime Minister boasted of the country’s system of banking regulation, which he suggested has kept Canadian banks from requiring the degree of government support that has been propping up institutions in other countries.

“Canada itself has shown that if you have a reasonable system of regulation, there is no need for governments to be nationalizing banks and directing executive compensation and trying to micromanage economic activity,” he said.

“One could say we were overregulated, but our solution is going to lead to us having the most free-enterprise financial sector in the world. We’re the only one not nationalizing or partial-nationalizing or de facto nationalizing.”

Mr. Harper said the fact that Canadian banks will now be competing against banks that are being supported by governments is a “very real worry” in the short term, but not in the long term.

“I think in the longer term this government intervention in the final sector, if it’s not unwound, will lead to politicization of the sector and poor management. I just don’t think government-run or … partially run banks are going to be very effective institutions over time,” he said.

Posted in Uncategorized |

You can follow any responses to this entry through the RSS 2.0 feed. Trackback from your own site.