The following, from this mornings Globe and Mail, is the best explanation yet for why banks feel they are not big enough and feel compelled to merge. Ed Weick B of M eases stand on welfare clients Contract with Toronto will be extended BY MARGARET PHILP Social Policy Reporter Globe and Mail, April 23, 1998 TORONTO - The Bank of Montreal has retreated from the tough line it was taking with Toronto over cashing welfare cheques. At a time when the banking industry is making overtures to low-income people, the bank was pushing proposals that social-service officiaLs said would treat people on welfare like second-class customers. A report this week from Shirley Hoy, Toronto's commissioner of community and neighbourhood services, said that when its contract with the city runs out a the end of the month, the bank wanted a new six-month deal that would restrict the number of branches where welfare recipients without bank acoounts could cash cheques, and also raise the monthly service charges billed to the city by 25 per cent. "There is very much a differential treatment of this client group," Ms. Hoy said in an interview. "The pe ople who can least afford it and are least able to deal with the banking institutions are the ones who have the poorest service." But late yesterday afternoon, a day after a spokesman described how costly and administratively tricky the bank has found serving a clientele whose cheques all arrive on the same day, the bank decided to leave the terms of the existing agreement intact when it renews the contract. "We have now decided to leave everything as it was prior to the contract expiring, since it's only going to be a six- or seven-month extension," Bank of Montreal spokesman Joe Barbera said. "The feeling was, `Wouldn't it be simpler to leave it as it was?"' The bank had wanted to raise the service charges for cashing welfare cheques - a bill covered by the cityfrom $48,000 a month ($5 a cheque) to $60,000 a month. As for limiting the branches serving people on welfare without accounts, Mr. Barbera said city officials had quite understandably drawn a false conclusion from the murky wording of a letter issued by the bank listing 13 branches. He said the letter never intended to suggest those branches were the oNy ones that would cash cheques for welfare recipients. The six-month extension is needed to tide the amalgamated Toronto over until it can choose a financial institution to provide all the city's banking services. The squabble between the bank and Toronto officials erupted as Canada's big chartered banks are collectively starting to reckon with a long-standing problem of policies that the Canadian Human Rights Commission has criticized as baldly discriminat against poor people. While almost all Canadians have bank accounts, a disproportionate number of people who collect welfare do without them - often after being turned away at the wicket by teller; following bank policy. On Tuesday, Mr. Barbera said the bank was trapped with a "dilemma' around cashing welfare cheques. When it signed the deal, the bank did not anticipate the crush of welfare recipients lining up to cash cheques on the first few days of every month, exhausting the cash inventory at some branches. Not only are welfare cheques issued all at once, but rival banks started sending their customers on welfare to the Bank of Montreal, he said. "There has to be a huge amount o1 cash in inventory and staff in the branches to service the accounts, and we've had real problems with that," Mr. Barbera said. "There's a real cost financially, a real cost from the standpoint of security for those peak days. That would lead us to say `Can we pick branches where there is a high amount of this business as op· posed to havlng to scatter it everywhere?'" etc., etc.
