Royal Bank of Canada (RBC) has agreed to buy HSBC’s banking business in Canada for C$13.5bn (£8.3bn, $10.1bn, €9.6bn). The deal is subject to regulatory and governmental approvals. The transaction is expected to complete in late 2023.
As part of the acquisition, RBC will acquire 100% of the issued common equity of HSBC Canada. In addition, RBC will acquire all the preferred shares and the outstanding subordinated debt issued by HSBC Canada and held by the HSBC Group for approximately C$1.1bn and C$1bn, respectively.
HSBC Canada offers a range of banking services including wealth management and cross-border banking.
Dave McKay, president and chief executive of RBC, said: “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.
“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.”
Strategic review
The sale agreement follows a HSBC strategic review of its operations in Canada.
Noel Quinn, chief executive of HSBC Group, said: “HSBC Canada is a high performing and profitable bank, with strong leadership and exceptional people. I am grateful to the whole team for their hard work in supporting our clients over many years.
“We decided to sell following a thorough review of the business, which assessed its relative market position within the Canadian market and its strategic fit within the HSBC portfolio, and concluded that there was a material value upside from selling the business.
“I am pleased that we have reached an agreement with RBC. The deal makes strategic sense for both parties, and RBC will take the business to the next level. We look forward to working closely with RBC’s leadership team to ensure a smooth transition for our clients and colleagues.
“Our group strategy is unchanged, and closing this transaction will free up additional capital to invest in growing our core businesses and to return to shareholders.”
