The National Bank of Canada will receive $100m in a new incentive package in the coming months to encourage it to invest in the banking sector, the Canadian government announced Tuesday.
The new package is designed to help the bank to improve its balance sheet and expand its commercial banking portfolio, and is expected to help Canada become a world leader in banking, said Minister of Finance Bill Morneau.
The $100-million package is a new reward for banks that have contributed to the Canadian economy in the last five years, and will help ensure that Canadian banks remain competitive globally, Morneau said in a news release.
The incentive package is based on a five-year average of Canada’s financial performance that is updated quarterly.
It was announced Tuesday at the Confederation of Canadian Municipalities’ annual meeting in Ottawa.
The incentives, which are targeted to banks with a total assets of more than $1 billion, include: a $30m increase in the maximum annual grant; $25m for each of the next five years; a $15m bonus for each year up to five years that the bank has contributed to Canada’s economic growth; and a $10m bonus each year thereafter.
The National Bank’s commercial banking and securities lending portfolios will receive a $500m increase over the next four years, Morreau said.
The bank’s banking and retail banking operations will receive an additional $100million, while its retail and investment banking business will receive another $200million.
The maximum annual reward for the bank’s retail banking and investment banks is $5 million.
The next annual incentive is expected in 2020, Morrea said.