LONDON, UK: HSBC Overseas Holdings (UK) Limited has entered into an agreement to sell its banking business in Canada (HSBC Canada) to Royal Bank of Canada (RBC). RBC will acquire 100% of the issued common equity of HSBC Canada for a base cash consideration of CA$13.5 billion (US$10.1 billion).
In addition, RBC will acquire all the preferred shares and the outstanding subordinated debt issued by HSBC Canada and held by the HSBC Group for approximately CA$1.1bn (US$0.8bn) and CA$1.0bn (US$0.7bn), respectively. The Transaction is expected to complete in late 2023.
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 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, commented: “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.
“I am pleased that we have reached an agreement with RBC. 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.”