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Canada has approved Royal Bank of Canada’s (TSX:RY:CA) (NYSE:RY) acquisition of HSBC’s (NYSE:HSBC) Canadian unit for $10.2B, which is subject to certain conditions imposed on the acquirer.
The agreement is contingent on RBC (RY) building a global banking center in Vancouver, protecting HSBC’s (HSBC) local staff, and waiving fees related to transferring mortgages from HSBC to RBC.
The acquisition will expand RBC’s (RY) domestic business and its global position. “The reality is that HSBC Canada only has a market share of around 2%, and we cannot prioritize the investment needed to grow it further,” said HSBC (HSBC) CEO Noel Quinn.
The deal “will allow more Canadians to access the global economy by combining the strength and scale of RBC with the international banking capabilities and financial products that HSBC Canada is known for,” said RBC (RY) CEO Dave McKay.
RBC (RY) expects to close the deal in Q1 2024. HSBC (HSBC) is considering a special dividend of $0.21 a share from the proceeds of the deal, likely to be paid in the first half of 2024.
