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An ugly acquisition

Bank of Montreal’s planned takeover of a Wisconsin bank has landed it in a high-profile political brawl


 
An ugly acquisition

Darryl Dyck/CP

When Bank of Montreal offered US$5.8 billion to buy Wisconsin bank Marshall & Ilsley (M&I) last December, it was seen as another bold move by a Canadian bank pushing into the U.S. market. Now BMO finds itself embroiled in the standoff between Wisconsin Gov. Scott Walker and the state’s unionized workers, and the unions have set their sights squarely on BMO’s latest acquisition.

Walker’s high-profile effort to strip public sector unions of bargaining rights sparked protests and riots in Madison last month. But having failed to deter the governor from his crusade, unions are now going after his biggest financial backers. Last year, M&I’s executives gave roughly US$46,000 to Walker’s campaign. The unions have warned that if M&I does not denounce Walker’s policies, they’ll yank their funds from the bank. A grassroots “Move Your Money Campaign” is under way. Earlier this month there were reports several firefighters withdrew their savings, around $200,000, from the bank. According to The Nation magazine, unions have roughly US$1 billion tied up in M&I.

What’s got the unions particularly incensed is that M&I was a major recipient of Washington’s TARP bailout program. M&I received US$1.7 billion, which it has yet to repay. What’s more, M&I executives, including CEO Mark Furlong, stand to reap US$70 million in “golden parachute” payments after the BMO deal closes, which is expected in July. Under the terms of BMO’s takeover, the bank will pay off the bailout money, negating TARP rules that limit executive compensation. Protesters took the issue to BMO’s annual meeting in Vancouver on March 22. BMO chairman David Galloway conceded the executive payouts were “large” but that it was a contractual arrangement. Meanwhile, president and CEO Bill Downe said the payouts are “not our affair.”

At the annual meeting, Downe said BMO expects to earn US$1 billion in profits from its U.S. consumer banking business after integrating M&I. The question now is, will union workers make it an issue for BMO by pulling their funds?


 
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An ugly acquisition

  1. Just one point of clarification. My dictionary defines "riot" as "noisy, violent disorder" involving a crowd of people. I'm a Madison resident and was down at the Capitol several times during the demonstrations, one time bringing along my 14-year old daughter. There was noise in the sense of music, marching, and shouting, but no violence.

  2. Just one point of clarification. My dictionary defines "riot" as "noisy, violent disorder" involving a crowd of people. I'm a Madison resident and was down at the Capitol several times during the demonstrations, one time bringing along my 14-year old daughter. There was noise in the sense of music, marching, and shouting, but no violence.

    • Doug, thank you for this perspective. Living in Boston it's hard to know what is really happening. It would be nice to see both sides give up some control. Unions take less control of guarantees (no guarantees in life) and executives accept legislation that limits excessive bonus packages. Both parties lose a little for the greater good.

  3. Doug, thank you for this perspective. Living in Boston it's hard to know what is really happening. It would be nice to see both sides give up some control. Unions take less control of guarantees (no guarantees in life) and executives accept legislation that limits excessive bonus packages. Both parties lose a little for the greater good.

  4. Of the top twenty donors in the last election, ten were untions (four were corporations). Follow the money, find the corruption.

  5. Of the top twenty donors in the last election, ten were untions (four were corporations). Follow the money, find the corruption.

  6. There were no riots in Madison over this – I think the writer is confusing Madison with Cairo, or Fox News. It was noisy, but civil (even the Republicans held themselves in check by not introducing troublemakers into the crowd as Gov. Walker and the DA in Indiana had considered).

  7. There were no riots in Madison over this – I think the writer is confusing Madison with Cairo, or Fox News. It was noisy, but civil (even the Republicans held themselves in check by not introducing troublemakers into the crowd as Gov. Walker and the DA in Indiana had considered).

  8. Anything that upsets the unions must be good. It's always good to get Mafia money out of the bank anyway.

  9. Anything that upsets the unions must be good. It's always good to get Mafia money out of the bank anyway.

  10. This is factually incorrect: "sparked protests and riots in Madison last month." There were NO riots. In fact the sustained protest over weeks that still continues has been non-violent and generally had less incidents than a sporting event.

    And as an M&I customer and Wisconsin resident, I will be looking to pull my funds as well. For people interested in their local communities, they should "move their money" and invest in smart credit unions instead.

  11. This is factually incorrect: "sparked protests and riots in Madison last month." There were NO riots. In fact the sustained protest over weeks that still continues has been non-violent and generally had less incidents than a sporting event.

    And as an M&I customer and Wisconsin resident, I will be looking to pull my funds as well. For people interested in their local communities, they should "move their money" and invest in smart credit unions instead.

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