Freeland Gives Green Light to RBC’s $13.5 Billion Acquisition of HSBC Canada Pending Conditions

Finance Minister Chrystia Freeland has given her approval for RBC’s $13.5-billion acquisition of HSBC Canada, despite opposition calls to block it due to concerns about reduced competition.

Ms. Freeland’s approval was the final obstacle for the deal following the Competition Bureau’s September approval.

The minister’s approval comes with conditions for RBC, including a requirement that none of HSBC Canada’s 4,000 employees be terminated within six months of the closing date, or two years for front-line staff. It also mandates that banking services continue to be offered at a minimum of 33 HSBC branches for four years.

Additionally, the federal government has initiated a consultation on enhancing competition in the financial sector, which will examine issues such as whether mergers between large banks should be formally prohibited and whether the government should restrict the amount that large banks can expand through acquisitions.

The consultation is prompted by concerns that RBC’s acquisition of HSBC Canada would reduce competition in an already heavily concentrated banking sector, where the six largest banks control around 93 percent of banking assets, and this deal would increase it to about 95 percent.

Calls to block the deal came from Conservative Leader Pierre Poilievre, who argued that Canada’s banking sector is overly concentrated and that the loss of HSBC Canada will exacerbate the issue.

He highlighted the Competition Bureau’s finding that the bank was a rate disrupter on mortgages, the loss of which could result in Canadians paying higher rates.

“The Trudeau Liberals should have supported competition in banking & mortgage lending by blocking the merger. Now all Canadians will pay the price,” he said on X, formerly Twitter, on Dec. 21.

Ms. Freeland responded to Poilievre on the platform, stating that HSBC was leaving Canada.

“By blocking this, Pierre Poilievre would have risked 4,000 workers losing their jobs, investors losing faith in Canada as a place to do business, and 780,000 Canadians losing banking services. That’s not a serious position — it’s reckless & irresponsible.”

RBC chief executive Dave McKay has stated that a rejection of the deal would have sent a negative signal to foreign investors.

He mentioned in an interview on Dec. 21 that approval was in the best interest of Canadians.

“We’re incredibly excited about bringing these two institutions together. It’s going to be great for Canadians and HSBC customers.”

He asserted that there is ample competition in Canadian banking and that this deal does not diminish that in any way.

He emphasized that Canadians are most worried about affordability, which was why the bank committed to providing $7 billion in financing for affordable housing construction across Canada as part of the approval conditions.

“We thought it was very important to address the No. 1 issue with Canadians, not competition. There’s tons of competition.”

The bank has also agreed to establish a new global banking hub in Vancouver, supporting over 1,000 jobs, creating about 440 net-new jobs in B.C. and increasing its client operations workforce in Winnipeg by 10 percent to add 100 new jobs.

McKay did not guarantee the maintenance of HSBC Canada jobs beyond the agreed timeline, stating that the bank needed to familiarize itself with the employees more before making those decisions.

“Give us six months and we’re going to get to know the employees, and we’ll manage a path going forward.”