When the Canadian Western Bank opened its doors in 1984, it was a bank on a mission.

In Alberta, exasperation with the big, Toronto-based banks stretched as far back as the early 1920s, but Ottawa’s National Energy Program and the early 1980s recession had raised frustrations to new levels.

Founded by Dr. Charles Allard and Eugene Pechet, what was originally known as the Bank of Alberta would be run by “common-sense people.” It would be headquartered in the West (Edmonton) where large banks “were sometimes hesitant to lend.” Management would be “nimble” and “non-bureaucratic,” and “decision-making would be local,” the founders declared. And finally, branch managers and their staff “would know local industries and get local business.”

By design, what soon became the Canadian Western Bank (CWB) was a different kind of Canadian bank, one that embodied a dream that many in Alberta and other parts of Western Canada have long held, to have their own bank, run by local people who understood their businesses.

But forty years after it opened, this week’s proposed $5-billion merger with Quebec-based National Bank showed that even CWB, despite its success in growing to 39 branches, mostly in Alberta, couldn’t achieve that mission solely as a regional player.

In Canada, sustainable success depends on building national banking franchises that facilitate greater access to capital and better risk management.

The history of Canada’s banks is a testament to this. Between 1867 and 1925 the Bank of Montreal absorbed seven other banks, deepening its reach into the Atlantic provinces, Ontario and the West. During the same period, Scotiabank merged with five banks, helping it consolidate its position in the Atlantic provinces and establish itself in Ontario, particularly in Toronto and Ottawa. The Canadian Bank of Commerce merged with nine banks during this time, which helped the Toronto bank secure strong positions in Quebec, the Atlantic provinces as well as Western Canada. RBC was not far behind, merging with eight banks. Two banks that relied on organic growth alone, Ontario’s Bank of Toronto and the Dominion Bank, merged in 1955 and went on to build the national and successful TD Bank franchise Canadians know today.

The struggles endured by smaller financial institutions in Western Canada reinforce the Canadian experience that motivates bankers to build national institutions. In 1985, two small, Alberta-based banks failed: the Canadian Commercial Bank and The Northland Bank. The fallout from those failures led to a Commission of Inquiry and changes to government bank inspection in Canada.