HSBC to Sell Its Canadian Business to RBC for US$10.1Bn

HSBC Holdings plc announced that its wholly owned subsidiary, HSBC Overseas Holdings (UK) Limited, has reached an agreement to sell its banking business in Canada (HSBC Canada) for CA$13.5bn (US$10.1bn) to Royal Bank of Canada (RBC).

RBC is one of Canada's biggest banks, and among the largest in the world based on market capitalisation. At the end of October, Fazzaco reported that National Bank of Canada and Canadian Imperial Bank of Commerce have dropped out as bidders for HSBC Canada​, while Bank of Montreal was still pursuing the deal.

Besides, RBC plans to acquire all the preferred shares and the outstanding subordinated debt issued by HSBC Canada and held by the HSBC Group for around CA$1.1bn (US$0.8bn) and CA$1.0bn (US$0.7bn), respectively.

According to Noel Quinn, CEO of HSBC Group, the group decided to sell HSBC Canada following a thorough review of the business, which assessed the branch's relative market position within the Canadian market and its strategic fit within the HSBC portfolio, and concluded that there was a material value upside from selling the business.

"HSBC Canada is a high performing and profitable bank, with strong leadership and exceptional people. I am grateful to the whole team for their hard work in supporting our clients over many years," Noel Quinn stated.

"I am pleased that we have reached an agreement with RBC. The deal makes strategic sense for both parties, and RBC will take the business to the next level. We look forward to working closely with RBC's leadership team to ensure a smooth transition for our clients and colleagues. Our Group strategy is unchanged, and closing this transaction will free up additional capital to invest in growing our core businesses and to return to shareholders."

The deal is expected to close in late 2023.