HSBC to divest HSBC Canada to Royal Bank of Canada for $10bn

HSBC Holdings, through its wholly-owned subsidiary HSBC Overseas Holdings (UK), has agreed to sell HSBC Canada to the Royal Bank of Canada (RBC) for a cash consideration of CAD13.5 billion ($10.1 billion).

Under the agreement, RBC will acquire 100% of the issued common equity of HSBC Canada, apart from all the preferred shares and the outstanding subordinated debt issued by HSBC Canada and held by the HSBC Group for approximately CAD1.1 billion ($800 million) and CAD1 billion ($700 million), respectively.

HSBC Canada with more than 130 branches and over 780,000 retail and commercial customers will improve RBC’s market share in the country.

The sale is expected to generate an estimated pre-tax gain of approximately $5.7 billion for the HSBC Group.

Noel Quinn — HSBC Group CEO said: “HSBC Canada is a high performing and profitable bank, with strong leadership and exceptional people.

“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.

“The deal makes strategic sense for both parties, and RBC will take the business to the next level.

“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.”

Expected to close in late 2023, the transaction is contingent on regulatory and governmental approvals and other conditions.