RBC gets govt nod for $10 bn acquisition of HSBC Canada

The Canadian government on Thursday granted approval for Royal Bank of Canada’s C$13.50 billion ($10.20 billion) acquisition of the Canadian assets of HSBC (HSBC Canada), in a deal that would further strengthen Canada’s financial market.

Under the deal, RBC would waive fees associated with the transfer of mortgages from HSBC to RBC, protect HSBC's employees in Canada and continue to operate at least 33 HSBC branches.

RBC will also increase its client operations center workforce in Winnipeg by 10 per cent and provide $7 billion in financing for affordable housing construction across Canada.

"The acquisition of HSBC Canada is good for the country and Canadians. Not only will this keep more of Canada's financial sector under Canadian ownership, but it will also allow more Canadians to access the global economy by combining the strength and scale of RBC with the international banking capabilities and financial products that HSBC Canada is known for," said Dave McKay, president and CEO of RBC.

RBC and HSBC Canada will work together to facilitate a smooth transition to RBC for HSBC Canada's clients and employees, who will receive further information in the coming days regarding what they can expect as both banks work towards completing the transaction, an RBC release stated.

RBC also announced significant investments across Canada and particularly in British Columbia, where many HSBC Canada employees are located.

RBC plans to build a global banking hub in Vancouver over the next five years and make Vancouver a leading city for financial services. The hub will be supported over 1,000 jobs across multiple disciplines, including those with technology skills in digital, data science, and cyber; client-facing, multilingual advisors; fraud experts; risk managers; and client credit adjudication experts, the release stated.

RBC said it would increase its client operations and advice centre teams in Winnipeg, Manitoba, creating at least 100 new jobs.

The provision of $7 billion in financing for the construction, retrofitting and renovation of affordable and sustainable housing in Canada will translate into approximately 25,000 housing units, to be completed over five years, it added. 

HSBC has more than 130 branches in Canada with 780,000 customers. However, it has a very low (2 per cent) share of the Canadian market..

HSBC, in an exchange filing, said the deal is expected to close in the first quarter of 2024. It said it is considering a special dividend of 21 cents a share from the proceeds in the first half of 2024.