######################################## #Written by David Tam, 1999. # #davidkftam@netscape.net Copyright 1999# ######################################## From tamda@ecf.toronto.edu Mon Jul 12 18:28:24 1999 Date: Tue, 2 Mar 1999 06:57:48 -0500 (EST) From: David Kar Fai Tam To: APS 424S Subject: #15-03/02/99-"Cautious applause greets B of M's small- business initiative" The Globe and Mail, Wednesday, February 24, 1999. B9. This article talks about Bank of Montreal's pledge to increase the amount of money it loans to small businesses. It plan's to increase the amount loaned to $20 billion annually by the year 2004. Currently, they are loaning $9 billion annually. Matthew Barrett, exiting CEO, made a pledge to create a division dedicated to small and medium-sized businesses and these are some of the actions that will be taken. As well, it plans to double its venture capital investment to $400 million. Incoming CEO Anthony Comper plans to follow through with this plan. Reactions of the small business sector and the Canadian Federation of Independent Business (CFIB) are ones filled with caution. These critics have always been skeptical about promises made by big banks to help. In our lectures it was mentioned that even though Canada has only five major banks, each one has expertise in providing financial services to specific industries. The Bank of Montreal is attempting to market itself as focused towards small and medium-sized businesses. In fact, it hopes to develop a reputation within these class of businesses. They hope that in the future when small businesses think of banks they will automatically think of the Bank of Montreal. Some other actions include plans to reduce the account manager turnover rate which have been detrimental to relations with these customers. It also plans to add 1000 more account managers to aid this cause. Mr Frank Techar, who will run the new division, says that over time his new division will look at lending money to companies it would not lend to under current criteria. I think this is a good sign for small businesses. Although any small business should be skeptical about any promises made by banks, these announcements will only help the cause and increase awareness, possibly pressuring the other major banks into taking more action. I think the Bank of Montreal's plan is quite sincere. It plans to offer small business more than just a loan or a line of credit. It will offer a "variety of value-added non-banking services to help ease the pressure in both the work and personal lives of customers". They also plan to expand existing programs such as sponsoring magazine advertising for small business. The Bank of Montreal seems to understand the needs of small business since they are not simply making easy promises of loaning more to this sector. Any bank can easily make such promises and therefore pretend to be pro small business. The Bank of Montreal genuinely wants to help small businesses achieve success. They understand that simply offering a loan won't help. They want to develop long lasting partnerships and gain the trust and respect of small businesses. The Bank of Montreal is treating this as a long term goal that will be beneficial to both the company and the small businesses in the long run.