By Jess Jones
The Canadian government has green-lit a $10.2bn (£8bn) bid by the Royal Bank of Canada (RBC) for HSBC’s domestic unit, HSBC Canada.
The acquisition secured approval from Canada’s Minister of Finance on Thursday, just over a year after it was first announced by HSBC.
In a trading update, both HSBC and RBC said they expect the deal to close in the first quarter of next year. The former said it is “committed to considering” a special dividend of $0.21 per share from the proceeds generated by the sale, slated for the first half of 2024.
“HSBC has capabilities to transact in different currencies that, right now, we do not have and we will bring on as a result of the transaction. They had international money movement capabilities that we’re really looking forward to,” Personal & Commercial Banking Group Head Neil McLaughlin said in an interview.
“It is very much part of where we see the opportunity.”
To secure the deal, RBC must establish a global banking hub in Vancouver, waive associated mortgage transfer fees from HSBC to RBC and safeguard HSBC Canada’s workforce.
The Canadian finance ministry confirmed the federal banking regulator has also waved through the acquisition.
While the Competition Bureau sanctioned the deal in September, it raised concerns about a potential “loss of rivalry” in the market.
HSBC has built up a sizable £6bn presence in Canada since the 1980s, according to some estimates.
