Canada govt approves $13bn sale of HSBC local unit to RBC

The Canadian government has approved the $13.5bn takeover of HSBC Canada by RBC, allowing the sale to proceed despite calls for it to be blocked over fears of reduced competition in the sector.

Finance Minister Chrystia Freeland gave the deal the green light, the final stage in the process after Canada's Competition Bureau approved it in September.

The government's approval is conditional on none of HSBC Canada's 4,000 employees being fired within six months of the closing date, or two years for front-line staff, and that banking services continue to be provided at a minimum of 33 HSBC branches for four years.

HSBC said the deal is expected to close in the first quarter of 2024 and was committed to considering the payment of a special dividend of $0.21 per share as a priority use of the proceeds from this sale in the first half of 2024.

Canada's Conservative Party leader Pierre Poilievre, said the government "should have supported competition in banking and mortgage lending by blocking the merger."

HSBC has more than 130 branches in Canada with 780,000 customers. Its is gradually reducing its global presence as part of a strategic pivot to focus on Asia.

"The reality is that HSBC Canada only has a market share of around 2%, and we cannot prioritize the investment needed to grow it further," said chief executive Noel Quinn.

Reporting by Frank Prenesti for Sharecast.com