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Bloomberg
Royal Bank of Canada agreed to buy HSBC Holdings Plc’s Canadian unit — the country’s seventh-largest bank — for C$13.5 billion ($10 billion) in cash, expanding its roster of business clients and bulking up its retail presence on the West Coast.
The deal is expected to be completed by late 2023, subject to regulatory approvals, Toronto-based Royal Bank said in a statement on Tuesday.
The purchase gives Royal Bank about 130 more branches, including about 45 in the West Coast province of British Columbia. The company also gains a significant commercial-banking franchise, with many of the clients in industries that trade and bank internationally.
“HSBC Canada offers the opportunity to add a complementary business and client base in the market we know best and where we can deliver strong returns and client value,†Royal Bank Chief Executive Officer Dave McKay said in the statement. “This also positions us as the bank of choice for commercial clients with international needs, newcomers to Canada and affluent clients who need global banking
and wealth-management
capabilities.â€
The move also represents a rare major domestic acquisition for one of Canada’s big banks. With mergers in the country’s highly concentrated banking sector blocked by regulators, Canada’s largest lenders have focused their expansion efforts on the US in recent years.
The past year has seen Canadian banks strike the industry’s two largest acquisitions ever, and both were of US firms. Bank of Montreal in December agreed to buy BNP Paribas SA’s Bank of the West unit for $16.3 billion to extend its presence in the US West. Then, in February, Toronto-Dominion Bank agreed to buy First Horizon Corp. for $13.4 billion, expanding its footprint in the Southeast.
HSBC Canada had C$134 billion of total assets as of Sept. 30, just over a third of the total of National Bank of Canada, the country’s sixth-largest lender. Commercial banking accounted for almost half of HSBC Canada’s net operating income in its most recent quarter.