(Ottawa) Finance Minister Chrystia Freeland has approved the Royal Bank of Canada’s (RBC) $13.5 billion takeover of HSBC Canada, despite calls from opposition politicians and other groups to block it due to fears of reduced competition.
Freeland’s approval was the final hurdle for the deal, after the Competition Bureau approved it in September.
The minister’s approval comes with conditions imposed on RBC, including that none of HSBC Canada’s 4,000 employees be laid off within six months of the closing date, or two years for front-line staff, and that Banking services continue to be provided in at least 33 HSBC Canada branches for four years.
The federal government has also launched a consultation on strengthening competition in the financial sector, which will examine issues such as whether mergers between big banks should be formally banned and whether the government should limit the growth of big banks through acquisitions.
The consultation comes as many have called for RBC’s takeover of HSBC Canada to be blocked because it would reduce competition in an already highly concentrated banking sector. Canada’s six largest banks control about 93% of banking assets, and this deal will increase that to about 95%.
Conservative Leader Pierre Poilievre had called for the deal to be blocked, saying the Canadian banking sector is too concentrated and the loss of HSBC Canada will only make the situation worse.
He pointed to the Competition Bureau’s finding that the bank was disrupting mortgage rates, the loss of which could force Canadians to pay higher rates.
“The Trudeau Liberals should have supported competition in the banking and mortgage sector by blocking the merger. Now all Canadians will pay the price,” he said Thursday on X, formerly Twitter.
Minister Freeland responded to Mr. Poilievre on X by emphasizing that HSBC was leaving Canada.
“By blocking this deal, Pierre Poilievre would have risked 4,000 jobs, investors losing faith in Canada as a place to do business and 780,000 people losing their banking services. It’s not serious, it’s irresponsible! »
RBC CEO Dave McKay said rejecting the deal would have sent a bad signal to foreign investors.
He said in an interview Thursday that the approval was good for Canadians.
“We are extremely excited to bring these two institutions together. This will be great for Canadians and HSBC customers. »
He argued that there is strong competition in the Canadian banking sector and that this agreement does not diminish it “in any form.”
He said Canadians are more concerned about affordability, which is why the bank agreed to provide $7 billion in financing for the construction of affordable housing across Canada as part of the conditions of approval.
“We thought it was very important to address the number one issue with Canadians, not the competition. There is tons of competition. »
The bank also agreed to establish a new global banking center in Vancouver that will support more than 1,000 jobs and create approximately 440 net new jobs in British Columbia, and to increase its customer operations workforce in Winnipeg by 10% to create 100 new jobs.
McKay did not commit to keeping the jobs at HSBC Canada beyond the agreed-upon deadline, saying the bank had not been able to learn more about the employees until the deal be approved.
“Give us six months and we’ll get to know the employees and chart a path forward. »