HSBC Canada to be Acquired by RBC for $13.5-billion (Subject to Regulatory and Government Approvals)

The Globe and Mail | James Bradshaw | Nov 29, 2022

Unsplash Joshua Lawrence HSBC - HSBC Canada to be Acquired by RBC for $13.5-billion (Subject to Regulatory and Government Approvals)

Image: Unsplash/Joshua Lawrence

Subject to regulatory and government approvals, Royal Bank of Canada is buying HSBC Bank Canada for $13.5-billion in cash in the largest deal ever reached between two domestic banks in the country.

  • Concentration: Acquisition would see RBC consolidate its position as Canada’s largest bank. The purchase price represents a multiple of 9.4 times HSBC Canada’s estimated 2024 earnings.  All six of Canada’s largest banks looked at acquiring HSBC Canada, but the bidding process soon narrowed down to a competition amongst Canada’s largest lenders.
  • RBC expects it would reap about $740-million of pre-tax cost savings annually, and incur acquisition and integration costs of $1-billion. RBC will also purchase HSBC’s preferred shares and subordinated debt for a total of about $2.1-billion.
  • HSBC Canada has $134-billion of assets as of Sep. 30, with about 130 branches and 4,200 full-time staff.

See:  HSBC Canada Breaks from Big Six Banks in Call to Encourage Fintechs

Dave McKay, RBC's CEO:

HSBC Canada offers the opportunity to add a complementary business and client base in the market we know best.  This also positions us as the bank of choice for commercial clients with international needs, newcomers to Canada and affluent clients who need global banking and wealth management capabilities. It will help us better serve global clients looking to invest and grow in Canada.

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