A near year-long bid by Royal Bank of Canada (RBC) to acquire HSBC Canada has cleared the latest hurdle with approval from the Competition Bureau.
The bureau has concluded that the $13.5-billion merger, which would see Canada’s largest bank take over the seventh largest, is unlikely to significantly lessen competition in the banking sector.
Under the terms of the agreement, first announced in November 2022, RBC will acquire 100 per cent of the common shares of HSBC Canada for an all-cash purchase price. All of HSBC Canada's earnings from June 30, 2022, through close will accrue to RBC.
"HSBC Canada offers the opportunity to add a complementary business and client base in the market we know best and where we can deliver strong returns and client value given our financial strength and award-winning service," said Dave McKay, President & CEO, RBC. "This also positions us as the bank of choice for commercial clients with international needs, newcomers to Canada and affluent clients who need global banking and wealth management capabilities. It will help us better serve global clients looking to invest and grow in Canada."
HSBC Canada had $134 billion in assets as of September 30, 2022, approximately 130 branches and 4,200 full-time equivalent employees. Its commercial bank brings strong capabilities focused on international business clients, including in liquidity management, trade finance, global cash management and sustainable finance, according to a statement.
The merger would, however, result in a “loss of rivalry” between the two financial institutions, the bureau said.
“The bureau found evidence of instances where HSBC Canada had materially affected RBC offers for a number of the products examined, including mortgages, high interest savings accounts, GICs and business loans and accounts,” it said.
Consumer groups and mortgage brokers have noted that HSBC Canada often led the market with lower mortgage rates than that available at major banks.
The bureau concluded that Canada’s other banking giants are effective competitors, with HSBC Canada’s competitive impact limited when compared with the country’s top financial institutions.
The deal is still subject to approval by the banking regulator and federal finance minister.
