The deal was announced as long ago as last November. So, it has taken over a year to obtain regulatory approval. And it is a deal that adds only 2 percentage points to RBC’s market share. But it is a significant and historic deal and one that became politicised quite unnecessarily.

RBC has finally been given government approval to acquire HSBC Canada.

The regulatory approval process was thorough, incorporating stakeholder consultations and independent economic analysis.

The case for the deal

RBC argues that the acquisition will position it as the bank of choice for globally-connected clients. It also argues that the deal is good news for Vancouver, where HSBC’s local head is based and for the broader Canadian economy.

The case for the deal stresses RBC’s commitment to job growth, technology investment, and expanded wealth management services.

And finally, the case for the deal stresses the benefit of keeping more of Canada’s banking sector in Canadian hands.

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The case against

Opponents of the C$13.5bn deal have been vocal. They have argued that if approved, it would land Canadians with higher rates and less choice in the market. The call to reject the merger became an issue for the Canadian parliament’s finance committee. In November, it reported that the reduction in competition could raise banking fees for consumers and increase the cost of mortgages.

The campaign to block the deal involved members from the Canadian Anti-Monopoly Project, Environmental Defence, Greenpeace Canada, Shift: Action for Pension Health and Planet Health, For Our Kids and Climate Action Network Canada.

Details of the deal

HSBC has operated in Canada since 1981. It runs a branch network of around 130 outlets. Its 4,200 employees serve around 780,000 customers.

HSBC Canada has C$120.5bn in assets and posted total operating income of $660m in the first three quarters of this year. HSBC holds a market share of about 2% of bank deposits and mortgages in Canada.

The argument in support of safeguarding Canada’s financial sector under Canadian ownership has won the day.

“I want to thank the Department of Finance, OSFI, and the Competition Bureau for their diligent work in reviewing this important acquisition,” said Dave McKay, president and CEO, RBC.

“The acquisition of HSBC Canada is good for the country and Canadians. Not only will this keep more of Canada’s financial sector under Canadian ownership. It will also 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.”

“By bringing the capabilities, international connections and exceptional talent of HSBC Canada to RBC, we are creating an enhanced banking experience for our clients, which includes new international products and innovative digital capabilities to help them achieve their financial goals,” added Neil McLaughlin, group head, Personal & Commercial Banking, RBC. “At the same time, HSBC Canada clients will gain access to RBC’s award-winning personal, commercial, wealth and capital markets offerings, while continuing to enjoy a wide range of international banking services.”

The acquisition will strengthen RBC’s premium domestic business and position on the global stage.

RBC’s commitments to Canadians

RBC has announced significant investments across Canada and particularly in British Columbia, where many HSBC Canada employees are located.

Over the next five years, RBC will build out a global banking hub in Vancouver.

The hub will be supported with over 1,000 jobs across multiple disciplines including those with technology skills in digital, data science, and cyber; client-facing, multilingual advisors; fraud experts; risk managers; and client credit adjudication experts.

RBC will also increase its client operations and advice centre teams in Winnipeg, with the creation of 100 new jobs.

It remains committed to donating 1% of its Canadian net income before tax each year. The addition of HSBC Canada will allow the bank to increase its support of Canadians and their communities from coast to coast.