The leader of Canada’s main opposition political party says the government should block HSBC Holdings Plc’s sale of its local operations to Royal Bank of Canada.
(Bloomberg) — The leader of Canada’s main opposition political party says the government should block HSBC Holdings Plc’s sale of its local operations to Royal Bank of Canada.
Royal Bank struck an agreement last year to buy HSBC Canada for C$13.5 billion ($9.9 billion), and Finance Minister Chrystia Freeland is expected to make a decision in the coming months, with the banks setting a goal of closing the deal in early 2024. Conservative Party Leader Pierre Poilievre said she should reject it to protect competition in mortgage lending.
“We have far too much concentration. We have these monstrous, government-protected behemoths that dominate 90% of the mortgage market, meaning very little choice for consumers,” Poilievre said in an interview on BNN Bloomberg Television. “Competition does not happen when the biggest player simply swallows the seventh-biggest player and Canadians are left paying the price.”
Poilievre leads the largest opposition group in Canada’s House of Commons and currently holds a large lead over Prime Minister Justin Trudeau’s Liberal Party in public opinion polls, though no election is expected until 2025.
Shares of RBC were down 1.1% at 12:36 p.m. in Toronto, broadly in line with the S&P/TSX Commercial Banks Index.
For Royal Bank, picking up HSBC’s 128 Canadian branches and C$120 billion in assets — including wealth management, personal and commercial banking — would be its largest acquisition ever. It represents a rare opportunity for Canada’s largest bank to gain significant additional share of the domestic lending market.
Canada’s antitrust watchdog, the Competition Bureau, offered its overall blessing to the deal in September, stating in a report to the finance minister that it won’t result in a “substantial lessening or prevention of competition.”
Consumer advocates say the merger has the potential to lead to higher mortgage rates, a key pocketbook issue as many homeowners have struggled to cover growing monthly payments. More than 1,500 Canadians contacted the bureau about the merger, with many highlighting how HSBC Canada’s offers of low mortgage rates help consumers negotiate — and have put pressure on larger banks to make more attractive offers.
Environmental activists have also protested the deal, arguing that HSBC’s policies on fossil fuel investments are more climate-friendly than those of Royal Bank.
“HSBC Canada’s parent company has announced their decision to exit the Canadian marketplace, leading to uncertainty for HSBC’s 700,000 Canadian clients,” Royal Bank spokesperson Andrew McGrath said in an emailed statement. “This proposed acquisition will also keep more well-paying financial sector jobs in Canada and will repatriate overseas roles that currently support HSBC’s Canadian operations.” A spokesperson for HSBC declined to comment.
Read More: RBC Deal for HSBC Canada Gets Blessing From Competition Body
–With assistance from Kevin Orland.
(Updates with share price, no-comment from HSBC)
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