Canada’s largest bank and one of the world’s biggest, Royal Bank of Canada (RY on TSX and NYSE), is joining forces with HSBC Canada in a deal worth $13.5 billion. The move will make RBC dominate the Canadian market. “This acquisition is an opportunity to grow our domestic and international businesses through HSBC Bank Canada’s platform while delivering immediate and long-term benefits to our shareholders,” RBC President and CEO Dave McKay said in a statement. The deal comes just a day after HSBC announced it would be closing 62 branches and cutting 1,100 jobs across Canada.
The acquisition will increase RBC’s presence in Asian banking markets. Royal Bank of Canada has announced that it sold its retail banking business in the Caribbean, including over 30 branches in 15 countries and territories, to HSBC. The Canadian bank said it’s also selling a “wealth management” business, including all five branches assets of RBC Trust Company (Bahamas) Limited.
In exchange, RBC will receive $7 billion cash and $6 5 billion ordinary shares as part of a strategic partnership deal, expected tight end year. This deal between two central banks is another example of Canada’s financial industry evolving globally.
Canada’s largest bank and one of the world’s biggest, Royal Bank of Canada (RY on TSX and NYSE), is joining forces with HSBC Canada in a deal worth $13.5 billion.
Canada’s largest bank and one of the world’s biggest, Royal Bank of Canada (RY on TSX and NYSE), is joining forces with HSBC Canada in a deal worth $13.5 billion.
The acquisition will make RBC the country’s dominant personal banking player and its largest lender overall by assets and deposits. It also gives it greater exposure to wealth management outside Alberta and Ontario, where it currently has a significant presence.
“This is an important transaction that at once allows us to operate more efficiently while giving us additional scale and a broader reach into some key areas,” said Brian Porter, CEO of RBC Group Financial Services Inc., who noted that the acquisition “further strengthens our position as Canada’s leading financial services company.”
The move will make RBC dominate the Canadian market.
RBC is the largest bank in Canada, and now it will be even more significant. This deal could significantly impact the Canadian market, but what does it mean for you?
The move will make RBC dominate the Canadian market. It’s already one of the biggest banks in assets and loans, so this acquisition will give them even more power to influence policy decisions. In fact, with $13 billion worth of assets under management and over 600 branches across Canada (the second most behind TD), RBC is poised to become an industry titan overnight!
“This acquisition is an opportunity to grow our domestic and international businesses through HSBC Bank Canada’s platform while delivering immediate and long-term benefits to our shareholders,” RBC President and CEO Dave McKay said in a statement.
“This acquisition is an opportunity to grow our domestic and international businesses through HSBC Bank Canada’s platform while delivering immediate and long-term benefits to our shareholders,” RBC President and CEO Dave McKay said in a statement.
RBC will take over HSBC’s Canadian business, including its offices and international assets. It will also take over HSBC’s Canadian and international liabilities.
The deal comes just a day after HSBC announced it would be closing 62 branches and cutting 1,100 jobs across Canada.
The deal comes just a day after HSBC announced it would be closing 62 branches and cutting 1,100 jobs across Canada.
Bank of Nova Scotia (BNS) said the acquisition is expected to close by the end of this year and will make Royal Bank of Canada (RY), Canada’s top lender, the country’s dominant bank with $1.7 trillion in assets and more than 80 million customers — almost half of all Canadian households. The transaction also makes RBC one of the world’s biggest banks by market value as well as one of its oldest lenders; it was incorporated in 1864 under its original name, The Bank Of Nova Scotia – referring to Nova Scotia being part of British North America at that time rather than Canada itself.
The deal will see it take over about $134 billion in HSBC assets, including a significant mortgage book.
HSBC Canada is one of the country’s largest banks, with a net income of $1.2 billion in the first quarter of 2019 and a mortgage book worth $134 billion.
RBC has been diversifying its asset base through a series of acquisitions, including taking over PNC Bank’s U.S. retail banking operations last year for almost US$28 billion (C$35 billion) to become North America’s 10th largest bank by deposits in 2020, buying insurance group Meridian for about US$4 billion earlier this year; and agreeing to buy ING Direct Canada from Dutch parent ING Groep NV for about C$3 billion in April. HSBC Canada had assets under management at C$384 billion as of January 31, according to data compiled by Bloomberg Intelligence
The acquisition will increase RBC’s presence in Asian banking markets
The deal will give RBC a more significant presence in Asian markets and help it expand its customer base. The bank will also access HSBC’s network of regional branches and offices.
Royal Bank of Canada has announced that it sold its retail banking business in the Caribbean, including over 30 branches in 15 countries and territories, to HSBC.
The deal will see HSBC take over RBC’s retail banking business in 15 countries and territories, including the Bahamas and Barbados.
The acquisition is expected to close by the end of 2019, subject to regulatory approval. The purchase price represents roughly $13.5 billion in total enterprise value, with approximately $2.6 billion paid upfront and a potential earn-out payment of up to $1.1 billion based on future performance targets being met over seven years.” This transaction is an important milestone as it allows us to develop our presence in the Caribbean region further,” said John MacDougall, group chief executive officer of HSBC Bank Canada.” We look forward to working with our new colleagues at RBC across all customer segments as we continue our strategy of serving high-quality retail customers and helping them succeed financially.”
The Canadian bank said it’s also selling a “wealth management” business, including all five branches and assets of RBC Trust Company (Bahamas) Limited.
RBC said it’s also selling a “wealth management” business, including all five branches and assets of RBC Trust Company (Bahamas) Limited. That business will be acquired by HSBC Bank (Canada), which is also developing RBC’s Canadian custody business.
The new bank will be part of HSBC’s Global Banking and Markets division. The deal is expected to close in the fourth quarter of 2019.
In exchange, RBC will receive $7 billion in cash and $6.5 billion in common shares of HSBC as part of the deal they’re calling a “strategic partnership.”
In exchange, RBC will receive $7 billion in cash and $6.5 billion in common shares of HSBC as part of the deal they’re calling a “strategic partnership.”
HSBC Canada president and CEO David McKay said this is an opportunity to grow the business by leveraging RBC’s footprint across Canada through expanding its commercial banking, wealth management, and capital markets businesses.
The deal is expected to close by the end of the year.
The deal is expected to close by the end of the year. This deal is an excellent example of how Canada’s financial industry continues to evolve globally and will make RBC dominate the Canadian market.
This deal between two central banks is another example of Canada’s financial industry evolving globally.
This deal between two central banks is another example of Canada’s financial industry evolving globally. RBC is Canada’s largest bank, and HSBC is one of the world’s largest banks. The $13.5 billion deal will give RBC dominance in the Canadian market, which has shown signs of slowing down in recent years due to increasing competition from U.S.-owned banks like Citigroup, Bank of America, and Wells Fargo.
The last time Canada’s banking industry experienced a deal of this magnitude was TD Bank Group’s 1999 acquisition of Canada Trust for roughly $8 billion in today’s dollars, which would be worth about $13.1 billion adjusted for inflation.
Using the 1998 prohibition of mergers between RBC and Bank of Montreal, as well as between TD and CIBC—the so-called “Big Five”—as a template for how federal authorities would react to future attempts at consolidation within Canada’s banking industry.
The Canadian Press published the following story on November 29, 2022.
Companies in this story: (TSX: RY)
Conclusion
The deal between RBC and HSBC Canada is significant for companies and the country’s financial industry. It shows how banks adapt to change to stay competitive in an increasingly globalized world.
