When you step back and examine the Canadian banking industry, you quickly realize that corporate capitalism isn't supposed to look quite like this. In 1997, the Canadian banking industry broke its own records for profitability. The big six Canadian banks--Royal Bank, CIBC, Bank of Montreal, Scotiabank, Toronto-Dominion Bank and the National Bank--posted a combined $7.4 billion in profits.

Ostensibly, this should be good news for all concerned. It should be good news for bank shareholders, who are receiving ever-larger dividend cheques thanks to those profits. And it should be good news for customers: logically, no one makes those kinds of profits without being blessed by the grace of happy clients, who gladly patronize their favourite bank in recognition of the wonderful service they receive from smiling tellers and glad-handing branch managers. With $7.4 billion in profits, there's more than enough money to go around; we should all be reaping the rewards and singing the praises of our fine banking system.

Instead, banks have become a theatre of the absurd. The banks' annual shareholders' meetings are starting to look more and more like NDP policy conventions, with shareholder activists--federal NDP leader Alexa McDonough among them--taking over the floor, yelling at board members through the microphones during Question Period and tabling proposals to cap CEO salaries.

And customers continue to be cut out of the prosperity, as banks cut back branch hours, freeze cheques and charge service fees at every turn. From street level, the only advantage anyone can see in the proposed Royal Bank/Bank of Montreal merger is that once the merger is complete, there will be one less bank in this country for us to hate. Can anyone stop the banks from having their way with us?

"This country will finally achieve national unity thanks to our common contempt for our banks," says shareholder activist Yves Michaud. Armed with a series of proposals for bank reform, Michaud attends each Canadian bank's annual meeting and attempts to win over other shareholders to his way of thinking. His proposals include capping CEO salaries at 20 times the average bank salary, separating the roles of chairman and CEO (currently held by the same person) and creating a truly independent bank ombudsman.

His biggest success came late last month at the CIBC annual meeting in Toronto, where some of his proposals received between 35 and 38 per cent of shareholder votes--thanks mostly to the support of large pension funds that own lots of bank stocks. Though he still doesn't have a majority on his side, Michaud says he has twice the support he did last year, and believes victory is at hand. "Gone are the days when shareholder meetings were mutual adoration sessions. The banks are used to running their operations like a monarchy. It's totally arrogant. Shareholders' rights are being threatened and shareholders are speaking up."

Michaud has been the most successful banking activist in Canada in recent months, but not everyone agrees on just how successful he really is. "Michaud just can't get critical mass behind his proposals. He's convinced a few pension plans to go along with him, and that's it," says Duff Conacher, chair of the Canadian Community Reinvestment Coalition (CCRC), an organization devoted to greater accountability in banking.

For Conacher, the fact that Michaud is a "shareholder activist" puts constraints on the kind of changes he can create. As a bank shareholder, aka a part owner, Conacher says Michaud still has the banks' own best interests at heart. Indeed, none of Michaud's proposals deal with any customer service issues: service fees, branch hours, bank services for low-income communities or access to basic, no-frills bank accounts. "It's a problem of attitude," says Conacher. "It doesn't matter whether you're a shareholder or not. Canadians have to stand up and say, 'I'm a depositor, so I have a stake in this.'"

When it comes to customer service, Canadian banks are engaging in a not-so-subtle form of social engineering. Deposits, withdrawals, bill payments and cheque processing can all be done electronically; banks envision a day when they no longer pay tellers to perform such tasks, and are working as hard as they can to make that vision come true whether customers want it or not.

The future lies in what the industry calls "points of service:" bank machines, the telephone and the Internet. So they encourage customers to use those points of service by discouraging people from using their branch. Most bank branches, such as the CIBC at the corner of Sherbrooke and Aylmer, now post two sets of hours: the branch is open from 9 a.m. to 5 p.m., but only from 10 a.m. to 4 p.m. for teller services, making it impossible to stop in at the bank on your way to or from work.

Equally annoying are the ever-present service fees being levied by all banks. A Bank of Montreal pamphlet on display in branches since last fall reads, "Choose the way to save: our fees are changing." But according to Conacher, "It should have read, 'Choose the way to be gouged: our fees are going up.'" A 1995 study conducted by the consumer magazine Protégéz-vous showed that, for an average account holder paying the usual assortment of bills, banking fees for the entire year ranged from $40 (National Bank) to a high of $250 (Scotiabank). "If I own shares in Scotiabank," Conacher says, "and I get $250 in dividends, I would think that's great. But all my dividends are being gobbled up in service fees."

The banks themselves are extremely reluctant to explain the logic behind their service charges. Ronald Monet, spokesman for the Bank of Montreal, says service fees account for only 2.6 per cent of bank revenue. But if people hate fees so much and they're worth so little, why not abolish them altogether? "Service fees are based on the principle of user-pay," Monet responds, "so that the people who use the services more often will pay the most." That doesn't answer my question. I reiterate: why not get rid of the service fees, and absorb those transaction costs with the bank's other revenue? "Oh, that revenue comes from other banking activities," Monet says. In other words, the banks don't want their customers interfering with their profits.

Despite widespread discontent, Monet insists that the Bank of Montreal, like all the other banks, is doing more and more to improve customer service. He points out that the Bank of Montreal now has a travelling financial services Winnebago, which will appear at Winter Carnivals and Jazz Festivals across the country.

But this kind of public-relations gimmickry has unfortunately become far too commonplace for Canadians. Even the banks' slogans--"One customer at a time," "Your bank, your way," "We see what you see," "We're paying attention"--are all designed to make them appear friendly and responsive, eager to take customers by the hand. But they all ring hollow: if the banks were really paying attention and could actually see what we see, they'd get their act together right quick.

"Part of what we're doing now is acknowledging that we haven't been communicating well with people," says Sharon Wilks of the Canadian Bankers Association (CBA), the industry's lobbying arm. According to Wilks, the CBA will embark on a five-year public-relations campaign to improve their relationship with Canadians, but it's doubtful that Canadians' disaffection can be cured with a mere PR massage.

Twisted as the banks' logic may be, it is second only to the logic of bank customers themselves: we give the banks our money, then we complain because they have our money. The CCRC's Conacher believes that the country is in desperate need of a Canada-wide Financial Consumer Organization (FCO), sort of a union of depositors, which would give individuals more clout in their relations with the nation's blueblood bankers. Such an FCO could lobby both the banks and the government for better disclosure on bank service fees, as well as on community reinvestment statistics and on the banks' track records for helping small businesses.

Conacher notes that even in the U.S., the home of unfettered free enterprise, banks must disclose such information by law. "The right-to-know movement has been very strong in the United States, and consumer groups have won a lot of disclosure concessions from the banks there," he says. "In Canada, consumer groups have not been as strong."

Conacher believes the proposed Royal/Montreal mega-merger might be the ideal opportunity to get the banks to agree to stricter disclosure rules. "Last week, Paul Martin said he'd let them merge if they lowered service charges, helped small business, and didn't cut any jobs"--precisely the things Conacher has been lobbying for since 1996.