HSBC Sells Canada Banking Operations to Royal Bank of Canada for $10.1 Billion, Gross Assets of $94.6 Billion
1st December 2022 | Hong Kong
HSBC, one of the largest banking group in the world with $2.9 trillion assets, is selling HSBC Canada banking operations to Royal Bank of Canada for $10.1 billion, with gross assets of $94.6 billion (HSBC Canada banking operations). HSBC has been in Canada for over 40 years and has more than 130 branches and over 780,000 retail and commercial customers. HSBC: “The review considered HSBC Canada’s relatively low market share and the Group’s ability to invest in HSBC Canada’s expansion and growth in the context of opportunities in other markets, and concluded that the best course of action strategically for the HSBC Group and HSBC Canada was to sell the business. The transaction will unlock significant value for the HSBC Group.” Noel Quinn, CEO of HSBC Group: “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. 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.”
“ HSBC Sells Canada Banking Operations to Royal Bank of Canada for $10.1 Billion, Gross Assets of $94.6 Billion “
HSBC Sells Canada Banking Operations to Royal Bank of Canada for $10.1 Billion
HSBC – We’ve agreed to sell our banking operations in Canada to Royal Bank of Canada (RBC) – one of the largest banks in the country. The deal is worth CA$13.5bn (US$10.1bn) and is expected to be completed in late 2023, subject to regulatory and governmental approvals. As a result of the deal:
- HSBC Group will generate an estimated pre-tax gain of c.US$5.7bn
- Our common equity tier 1 ratio is expected to get a boost of c.130 basis points over and above existing capital plans
- The HSBC Board will consider opportunities for organic growth and investment and how much of the proceeds should be used for a one-off dividend and/or share buybacks (in addition to any existing share buyback programme)
We continue to target a return on average tangible equity of at least 12% from 2023, excluding the gain on this transaction. We remain committed to this target after completion of the sale.
Noel Quinn, HSBC Group Chief Executive: “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. 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.”
Strategic review
The sale agreement follows a strategic review of HSBC Canada, which is among Canada’s premier international banks with more than 130 branches and over 780,000 retail and commercial customers. The review took into account:
- Our relatively low market share in Canada
- Our ability to invest in HSBC Canada’s expansion and growth in the context of opportunities in other markets
- Strong expected interest from other banks in purchasing a successful business
It’s business as usual for HSBC in Canada until the transaction completes.
Linda Seymour, HSBC Canada CEO: “Thank you to our valued clients in Canada who have trusted us to fulfil their ambitions in both good and challenging times for over 40 years. It’s our privilege to work with you and we look forward to serving you through the transition and beyond.”
HSBC Holdings plc
HSBC Holdings plc, the parent company of HSBC, is headquartered in London. HSBC serves customers worldwide from offices in 63 countries and territories in its geographical regions: Europe, Asia, North America, Latin America, and Middle East and North Africa. With assets of US$2,992bn at 30 September 2022, HSBC is one of the world’s largest banking and financial services organisations.
About RBC
Royal Bank of Canada is one of Canada’s biggest banks, and among the largest in the world based on market capitalisation. It has over 92,000 employees serving 17m clients in Canada, the US and 27 other countries. It is one of North America’s leading diversified financial services companies, and provides personal and commercial banking, wealth management, insurance, investor services and capital markets products and services on a global basis.
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