Royal Bank Receives Federal Approval For $13.5 Billion Purchase Of HSBC Canada
Canadians are about to get slightly fewer banking options, with Canada’s federal finance minister, Chrystia Freeland, approving of Royal Bank of Canada’s (TSX: RY) acquisition of HSBC Bank Canada.
Freeland and Canada’s government argued that the approval protects 4,000 jobs in Canada following HSBC’s decision to exit the Canadian market last year as part of a global restructuring plan. The bank provides banking service to 780,000 Canadians.
As part of the approval, RBC is to establish a new global banking hub in Vancouver that will support 1,000 jobs, and create 440 net new jobs in the process. The company will also expand its operation centre in Winnipeg by 10%, amounting to 100 jobs, maintain at least 33 HSBC branch locations for at least four years, and waive certain fees for HSBC clients.
And with housing being the popular political football right now, the government has also demanded that $7 billion in financing be provided for affordable housing construction to support 25,000 new home constructions in Canada, while also demanding that RBC and HSBC provide retail lending supporting for redeveloping single family homes into multi family homes.
READ: Poilievre Wants HSBC-RBC Merger Blocked: “No Hope Of… More Competition”
RBC also indicated that it will donate 1% of its net income before taxes each year, and commit $5 million over five years to support the agricultural and agri-processing sector in Manitoba.
“The acquisition of HSBC Canada is good for the country and Canadians. 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,” commented Dave McKay, CEO of RBC.
RBC in November 2022 agreed to acquire HSBC Canada for $13.5 billion.
Royal Bank of Canada last traded at $133.09 on the TSX.
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