© Reuters. FILE PHOTO: HSBC Bank logo is seen in this illustration taken March 12, 2023. REUTERS/Dado Ruvic/Illustration/File photo
(Reuters) -Canada on Thursday approved Royal Bank of Canada’s C$13.5 billion dollars ($10.2 billion) acquisition of HSBC Holdings (LON:)’ local operations, with conditions, more than a year after the country’s biggest lender announced the deal.
Canada’s Finance Minister Chrystia Freeland required RBC to establish a new global banking hub in Vancouver, waive fees associated with the transfer of mortgages from HSBC to RBC, and protect HSBC’s Canadian workforce.
RBC will also have to increase its client operations centre workforce in Winnipeg by 10%, provide $7 billion in financing for affordable housing construction across Canada and continue banking services at a minimum of 33 HSBC branches.
The Vancouver hub would support more than 1,000 jobs while creating about 440 net new jobs in British Columbia, Freeland said.
RBC said the HSBC acquisition will boost its domestic business and position it on the global stage.
“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,” CEO Dave McKay said.
The finance department said the deal was also approved by the federal banking regulator Office of the Superintendent of Financial Institutions.
The Competition Bureau approved the deal in September saying it was unlikely to hurt competition but noted that the deal would “result in a loss of rivalry between Canada’s largest and seventh-largest banks.”
Canada’s Conservative party leader Pierre Poilievre, who had urged Ottawa to reject the deal, on Thursday said the government “should have supported competition in banking and mortgage lending by blocking the merger.”
“Now all Canadians will pay the price,” he said on X, previously Twitter.
The merger, RBC’s biggest, was first announced in November 2022. The news came amid a string of acquisitions announced by Canadian banks, pushing for growth at home and south of the border. BMO acquired U.S. lender Bank of the West, while TD Bank offered to buy U.S. regional lender First Horizon.
HSBC, which once advertised itself as the “world’s local bank,” has more than 130 branches and 780,000 customers in Canada. The Canadian exit came as a part of its strategy to shrink its global footprint and focus on the Chinese market.
“The reality is that HSBC Canada only has a market share of around 2%, and we cannot prioritise the investment needed to grow it further,” HSBC Group Chief Executive Noel Quinn said in a statement.
Deals of this size in the banking sector have not been attempted in Canada since the early 1990s, when RBC wanted to acquire rival Bank of Montreal. That acquisition was blocked by regulators.
($1 = 1.3282 Canadian dollars)
