OTTAWA — Finance Minister Chrystia Freeland has approved RBC's $13.5-billion takeover of HSBC Canada, despite calls from opposition politicians and other groups to block it over concerns of reduced competition.
Freeland's approval was the last hurdle for the deal after the Competition Bureau approved it in September.
The minister's approval comes with conditions on RBC, including that none of HSBC Canada's 4,000 employees be fired within six months of the closing date, or two years for front-line staff, and that banking services continue to be provided at a minimum of 33 HSBC branches for four years.
The federal government has also launched a consultation on strengthening competition in the financial sector that will look into questions like whether mergers between large banks should be formally banned and whether the government should limit how large banks can grow through acquisitions.
The consultation comes as many have called for RBC's takeover of HSBC Canada to be blocked as it would decrease competition in what is already a heavily concentrated banking sector. Canada's six biggest banks control around 93 per cent of banking assets, and this deal will boost it to about 95 per cent.
In calling for the deal to be blocked, Conservative Leader Pierre Poilievre said Canada's banking sector is overly concentrated and the loss of HSBC Canada will only make it worse.
He pointed to the Competition Bureau’s finding that the bank was a rate disrupter on mortgages, the loss of which could leave 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 Thursday.
Freeland responded to Poilievre on the platform, saying 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 said that a rejection of the deal would have been a bad signal to foreign investors.
He said in an interview Thursday that approval was good for Canadians.
"We're incredibly excited about bringing these two institutions together. It's going to be great for Canadians and HSBC customers."
He maintained that there is extensive competition in Canadian banking, and that this deal doesn't lessen that in "any shape or form."
Canadians are most concerned about affordability, he said, which is why the bank agreed to provide $7 billion in financing for affordable housing construction across Canada as part of the conditions of approval.
"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 set up a new global banking hub in Vancouver that will support more than 1,000 jobs and create about 440 net-new jobs in B.C., and increase its client operations workforce in Winnipeg by 10 per cent to create 100 new jobs.
McKay didn't commit to maintain HSBC Canada jobs beyond the agreed timeline, saying the bank hadn't been able to learn in-depth about employees until the deal was approved.
"Give us six months and we're going to get to know the employees, and we'll manage a path going forward."
— by Ian Bickis in Toronto
This report by The Canadian Press was first published Dec. 21, 2023.
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