RBC chief executive Dave McKay said the deal offers an opportunity to add a complementary business and client base. “This also positions us as the bank of choice for commercial clients with international needs, new entrants to Canada and affluent clients who need global banking and wealth management capabilities,” McKay said in a statement Tuesday. “It will help us better serve clients worldwide who want to invest and grow in Canada.”
130 branches in Canada
“The deal makes strategic sense for both parties and will take RBC’s business to the next level,” HSBC Group chief executive Noel Quinn said. “Our group strategy remains unchanged and closing this transaction will free up additional capital to invest in growing our core businesses and to return to shareholders.” The Canadian arm of Britain’s HSBC is up for sale this year as the parent company faces pressure from its largest shareholder, China’s Ping An Insurance Group, to boost returns. At more than $13 billion, the price makes the deal the most expensive ever for a Canadian bank to buy another Canadian-based bank, although the so-called Big Five typically spend more than that on foreign acquisitions. HSBC has been operating in Canada since 1981 and today has approximately 130 branches and 4,200 employees. According to its most recent quarterly report, HSBC Canada had assets worth $125 billion at the end of June and posted operating income of more than $1.1 billion in the first half of this year. HSBC has about two per cent of all bank deposits and mortgages in Canada. The deal is expected to close next year, pending regulatory and shareholder approval. Due to the size of the merger, it needs the OK of several government agencies, including the Competition Bureau, the Office of the Superintendent of Financial Institutions and the Treasury Department. “In assessing a transaction, the Secretary of the Treasury may take into account factors such as the rights and interests of consumers and business customers, the impact of the transaction on the level of competition in the industry, its consequences for the stability and integrity of the financial sector and the public’s trust in it,” the ministry said in a statement.
