HSBC to sell Canada operations to RBC for $10bn

Subject to regulatory and governmental approvals, HSBC plans to sell Royal Bank of Canada (RBC) its Canadian banking operations for a cash consideration of $10.1 billion.

100% of HSBC Canada’s issued common equity will be purchased by RBC. For an extra $1.5 billion, the company will also purchase all of the preferred shares and outstanding subordinated debt issued by HSBC Canada and owned by the HSBC Group. The deal is anticipated to close in late 2023.

After conducting a strategic review of its operations in Canada, where it has more than 130 branches and more than 780,000 retail and business clients, HSBC claims it determined that selling the company was the best course of action after taking into account its “relatively low” market share and its capacity to invest in market expansion in light of opportunities in other markets.

“We decided to sell following a thorough review of the business, which assessed its 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,” explains Noel Quinn, CEO of HSBC Group.

Quinn continues that the purchase “makes strategic sense to both parties”. The completion of this deal will free up extra funds to deploy in expanding our core businesses and returning to shareholders while maintaining the group’s overall strategy.