Another step forward for RBC/HSBC Merger

The Royal Bank of Canada (RBC) has received approval from the Competition Bureau for its nearly year-long bid to acquire HSBC Canada for $13.5 billion. This merger, which involves Canada's largest bank absorbing the seventh-largest, is not expected to significantly reduce competition in the banking sector, according to the bureau. Under the terms of the agreement, RBC will acquire all of HSBC Canada's common shares for an all-cash purchase price, and HSBC Canada's earnings from June 30, 2022, onward will go to RBC.

The merger is seen as an opportunity for RBC to expand its client base and services, particularly in the area of international business clients, including liquidity management, trade finance, global cash management, and sustainable finance. However, it does raise concerns about a "loss of rivalry" between the two banks, as HSBC Canada was known for offering competitive rates on products like mortgages, high-interest savings accounts, GICs, and business loans.

The Competition Bureau believes that Canada's other major banks are effective competitors and that HSBC Canada's competitive impact is limited when compared to these institutions. It's important to note that the deal is still pending approval from the banking regulator and the federal finance minister.

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Gerald Li - Clear Trust Mortgages

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