HSBC agrees to sell business in Canada for CA$13.5bn

We’ve agreed to sell our banking operations in Canada to Royal Bank of Canada (RBC) – one of the largest banks in the country.

The deal is worth CA$13.5bn (US$10.1bn) and is expected to be completed in late 2023, subject to regulatory and governmental approvals.

As a result of the deal:

• HSBC Group will generate an estimated pre-tax gain of c.US$5.7bn
• Our common equity tier 1 ratio is expected to get a boost of c.130 basis points over and above existing capital plans
• The HSBC Board will consider opportunities for organic growth and investment and how much of the proceeds should be used for a one-off dividend and/or share buybacks (in addition to any existing share buyback programme)

We continue to target a return on average tangible equity of at least 12% from 2023, excluding the gain on this transaction. We remain committed to this target after completion of the sale.

Chief executive’s view

“HSBC Canada is a high performing and profitable bank, with strong leadership and exceptional people. I am grateful to the whole team for their hard work in supporting our clients over many years,” said Noel Quinn, HSBC Group Chief Executive.

“The deal makes strategic sense for both parties, and RBC will take the business to the next level. We look forward to working closely with RBC’s leadership team to ensure a smooth transition for our clients and colleagues.

“Our Group strategy is unchanged, and closing this transaction will free up additional capital to invest in growing our core businesses and to return to shareholders.”

Strategic review

The sale agreement follows a strategic review of HSBC Canada, which is among Canada’s premier international banks with more than 130 branches and over 780,000 retail and commercial customers.

The review took into account:

• Our relatively low market share in Canada
• Our ability to invest in HSBC Canada’s expansion and growth in the context of opportunities in other markets
• Strong expected interest from other banks in purchasing a successful business

It’s business as usual for HSBC in Canada until the transaction completes.

“Thank you to our valued clients in Canada who have trusted us to fulfil their ambitions in both good and challenging times for over 40 years,” said Linda Seymour, HSBC Canada CEO.

“It’s our privilege to work with you and we look forward to serving you through the transition and beyond.”