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HSBC eyes bumper dividend from $10 bln sale of Canada unit to RBC - Reuters
Nov 29, 2022 1 min, 15 secs
LONDON/TORONTO/NEW YORK, Nov 29 (Reuters) - HSBC (HSBA.L) has agreed to sell its business in Canada to Royal Bank of Canada (RY.TO) for C$13.5 billion ($10 billion) in cash, paving the way for a potential bumper payout for shareholders later down the line.

The deal will help RBC consolidate its leading position in one of the world's most concentrated banking markets, where the top six lenders control about 80% of banking assets.

HSBC's exit from Canada marks the first major banking deal in Canada since ING (INGA.AS) sold its local operations to Bank of Nova Scotia (BNS.TO) for C$3.1 billion in 2012.

The deal will boost RBC's assets by C$134 billion to C$2 trillion, and add about 130 branches to its existing network of 1,200 branches.

The deal also repairs what was an uncharacteristically weak capital position relative to HSBC's peers, Gordon said.

Carl De Souza, Head of Canadian Banking at DBRS Morningstar, told Reuters the big question about the deal was "how the regulatory approval works out from a competition perspective.".

RBC and HSBC's combined assets would account for 25% of total Canadian banking assets, according to Morningstar.

Analysts had valued HSBC's Canada business in the range of C$8 billion to C$10 billion.

Royal Bank of Canada's swift move to buy HSBC's Canada unit for C$13.5 billion ($10 billion) strengthens its pole position at home, but faces a long road to clear regulatory challenges.

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