How Will Royal Bank of Canada ‘s Strategic Deal to acquire HSBC will Reshape Canada’s Banking Landscape

Royal Bank of Canada (RBC) to acquire HSBC Bank Canada (HSBC)

One of the biggest unions of financial institutions has been given a nod in affirmation as Royal Bank of Canada (RBC) is about to join forces with HSBC Bank Canada (HSBC) in a whopping c$13.5 billion. This seems to be making a significant impact not only locally but also on a global level as well.

A detailed News release has been published on the official website of Government of Canada, Department of Finance Canada which thoroughly explains all the relevant details, concerns and future commitments.

What are the terms and conditions imposed on RBC before the acquisition of HSBC?

But that is not the deal is all about. Before the deal can go through, RBC has to set up a global banking hub in Vancouver.

• Creating the Vancouver hub is expected to bring over 1,000 jobs and create about 440 new positions in British Columbia, according to Deputy Prime Minister and Finance Minister ”Chrystia Freeland“ news release.

• They also need to drop the fees for moving mortgages from HSBC to RBC and promise to keep HSBC’s Canadian employees on board.

• In fact, RBC has to increase its workforce in Winnipeg by 10%, shell out $7 billion for affordable housing projects across Canada.

• RBC needs to make sure that at least 33 HSBC branches stay open along with ATM’s for four years.

Earlier in a separate statement issued by The Department of Finance Canada:

  “Today HSBC Holding plc and the Royal Bank of Canada (RBC) have announced that they have concluded an agreement for the sale of HSBC Bank Canada (HSBC) to RBC, subject to the necessary regulatory approvals.

It also mentioned:

“The Competition Bureau, under the Competition Act, will also review the transaction.

“As stipulated in the Bank Act, all acquisitions and amalgamations in Canada’s banking sector are subject to the approval of the Minister of Finance, who must take into account all matters she considers relevant.

“For further clarity, in assessing a transaction, the Minister of Finance may take into account such factors as the rights and interests of consumers and business customers; the impact of the transaction on the level of competition in the sector; its consequences for the stability and integrity of the financial sector and public confidence in it. The Minister of Finance has the authority to impose any terms and conditions and to require any undertaking that she considers appropriate.

HSBC Bank, which is looking to acknowledge the nod, is reportedly saying that they are working with RBC to take things forward and an outcome can be expected by the first quarter of 2024. In fact a special dividend of 21 percent can also be expected in the first half on 2024.

Considered to be Canada’s largest team up of financial institutions, RBC considers this to be a smart move which is not just reduced to solidifying the institute at home but can help make a global impact.    

Currently, HSBC’s work force consists of around 4,000 people in Canada who are working on providing solutions to banking services to a Canadian population of around 780,000 people. The government giving the thumbs up to the deal is based on a commitment to keeping these jobs safe, ensuring Canadians can keep using their services, and making sure people have access to competitive banking.

To get approval, the Finance Minister made sure RBC committed to some significant things. This includes setting up that global banking hub, making sure jobs are secure, and putting a chunk of money into affordable housing projects across Canada.

As the deal moves forward, all eyes are on how it will change the banking scene in Canada. RBC is getting ready to play an even bigger role at home and on the world stage. So, by the first quarter of 2024, get ready for some big changes in Canada’s financial world!