Royal Bank of Canada RY-T said late Monday that it expects to close its $13.5-billion takeover of HSBC Holdings PLC’s Canadian subsidiary in March, clinching the biggest domestic banking deal on record.
Canada’s largest lender said in a statement that it plans to close its proposed acquisition of HSBC Bank Canada on March 28, less than half a year later than its initial timeline. The deal received its final stamp of approval from Ottawa in December after RBC faced opposition from stakeholder groups and federal opposition parties in recent months.
By purchasing HSBC Canada, RBC will gain tens of billions of dollars in deposits, mortgages and commercial loans, while also bolstering its services internationally. In Canada, Britain-based HSBC employs about 4,000 people and provides banking services to around 780,000 clients.
RBC will immediately begin converting HSBC’s products and services over to its own systems. HSBC branches and offices will open on April 1 as RBC locations.
When the deal was announced in November, 2022, RBC and HSBC said they expected the deal to close late in 2023. But the transaction bumped up against slight delays as it moved through regulatory approvals.
Finance Minister Chrystia Freeland, who had the final say on the deal, approved the transaction in mid-December. RBC agreed to a number of terms to secure the federal government’s approval, including maintaining jobs in the short term and financing affordable-housing projects.
In November, the House of Commons finance committee recommended that Ms. Freeland reject the deal, arguing it would harm affordability and competition in Canada’s banking sector. Climate groups and other stakeholder organizations have also urged Ottawa to reject the acquisition.
But the deal did not alarm Canada’s competition watchdog. The transaction received its first approval in September when the Competition Bureau backed the deal. The Office of the Superintendent of Financial Institutions also did not object to the transaction and recommended approving the sale, according to the Department of Finance.
In December, RBC chief executive officer Dave McKay said that the federal government’s terms will not have a financial impact on the benefits of the deal.
The bank agreed to several concessions, including that it retain certain jobs at HSBC for up to two years, open a global banking hub in Vancouver, maintain a minimum number of HSBC branches and finance affordable-housing projects.
The bank had already been considering similar conditions, Mr. McKay said at the time.
Stefanie Marotta