On November 29, 2022, the Royal Bank of Canada announced its plans to buy HSBC Bank Canada in an agreement heralded as Canada’s biggest domestic banking deal on record. What does the acquisition mean for HSBC customers? Business as usual — for now.
RBC to buy HSBC Canada for $13.5 billion
RBC intends to purchase HSBC Canada for $13.5 billion in cash. If approved, the deal will cement RBC’s position as one of the largest banks in Canada. RBC’s total revenue grew to approximately $48.98 billion in 2022, according to Statista. It’s already the largest bank in Canada by market capitalization but trails TD Bank in total assets, according to Statista analysis.
The acquisition will end over 40 years of financial services for HSBC Canada. The Canadian arm of the multinational bank boasts 130 branches, 4,200 employees and $134 billion in assets as of September 2022. While it’s agreed to sell its Canadian subsidiary, HSBC will continue its operations in Europe and beyond.
Deal expected to close in early 2024, following regulatory approval
Executing a complicated corporate merger takes time, and this deal is no exception. RBC’s acquisition of HSBC Canada isn’t expected to wrap up until the first quarter of 2024.
On September 1, 2023, the Competition Bureau of Canada approved the deal — a significant milestone for the acquisition. But a nod from the Competition Bureau isn’t the only regulatory approval RBC needs to move ahead with the merger. Next, federal Minister of Finance Chrystia Freeland must approve the sale. The Finance Minister will use the report generated by the Competition Bureau on the proposed bank merger to inform her decision.
What HSBC customers should know about the acquisition
Right now, there’s a lot up in the air.
First, HSBC Canada will not operate as a separate brand once the acquisition is complete. “After closing, we expect to bring HSBC Canada clients and employees under the umbrella of RBC’s brand,” Jeff Lanthier, director of media relations for RBC, said in an email when the potential acquisition was first announced.
This means that HSBC Canada customers will eventually gain access to RBC’s existing financial services framework, which includes over 1,200 branches across the country. It’s difficult to say exactly when this transition will take place. As for what happens to HSBC customers in the interim, both RBC and HSBC have publicly stated that nothing changes.
“For now, it is business as usual,” Lanthier said in an email. “There will be no impact to clients as we work toward closing.”
Linda Seymour, president and CEO of HSBC Canada, continues to echo Lanthier’s sentiments. “You do not need to take any action,” Seymour wrote to current HSBC customers in a public letter dated September 1, 2023. “Continue to bank with HSBC as you usually do. All terms of your agreements stay the same and there is no change to how we will provide service.”
But ultimately, big changes are in store for HSBC customers, and Seymour acknowledges this. “There will be a transition period of several months to establish how to integrate the operations and clients of HSBC Canada into RBC at completion of the sale,” Seymour wrote in a public letter dated November 29, 2022.
What that transition period will look like remains to be seen. But a few things can become problematic during bank mergers and acquisitions. Common issues include closed branches, technical problems and long customer wait times.
If you bank with HSBC and have reservations about the merger, don’t be afraid to compare your banking alternatives in the interim. In the meantime, you can also explore general types of credit cards, features and perks that come with RBC credit cards.
4 things to consider when switching banks
Before you jump ship from one bank to another, consider the following:
- Fees. Banking fees vary widely between institutions, so before you sign up, check the fine print for account fees, inactivity fees, the cost of transferring funds and more.
- Branch access. If you prefer to bank face-to-face, familiarize yourself with the bank’s branch network. Some banks are more widespread than others — and some, like online-only banks, don’t have any branch network to speak of.
- Online banking options. Online banking platforms are more ubiquitous than they once were, but there may be limitations to what you can do online. If digital access is important to you, scope out the bank’s online offerings before you open an account.
- Customer support. Some banks have round-the-clock customer support, others don’t. Some have live chat support; others limit customer communications to email inquiries. Consider how you prefer to receive support from your bank to scope out banks with customer service options that fit your needs.