Canada Parliament panel asks Ottawa to reject RBC, HSBC unit deal (updated)
02/11/2023 19:11
(Adds Finance Department's statement in paragraph seven)
By Nivedita Balu
TORONTO, Nov 2 (Reuters) - The finance committee of
Canada's House of Commons lower chamber has asked Ottawa to
reject Royal Bank of Canada's RY.TO C$13.5 billion acquisition
of HSBC's domestic unit, citing the lack of competition in the
country's financial sector.
The committee's report late Wednesday comes weeks after the
Competition Bureau approved the transaction, clearing the way
for one of the biggest deals in the country's financial sector.
However, the deal has gathered opposition.
The deal, which was announced in November 2022, is now in
the hands of the Office of the Superintendent of Financial
Institutions (OSFI) and Canada's finance ministry. It is
expected to close in the first quarter of 2024.
"Removing competition in the financial sector could raise
banking fees for Canadians who already pay more for financial
services due to an already uncompetitive financial sector," the
committee said in the report.
"There already are very few financial institutions in the
Canadian banking sector representing a lack of competition."
Pierre Poilievre, Canada's Conservative party leader, has
also called for the federal government to reject the deal,
saying that blocking the deal is a clear step the government
could take to address affordability concerns.
"We strongly believe that RBC's proposed acquisition offers
HSBC’s Canadian clients the best possibility for continuity and
stability while providing them with innovative made-in-Canada
international banking solutions and advanced digital
capabilities," an RBC spokesperson said.
The finance department in its response said Minister
Chrystia Freeland's decision will be informed by a regulatory
review processes, including those administered by the OSFI and
the Competition Bureau.
The last time a deal of this size was attempted in Canada
was in the early 1990s, when RBC wanted to acquire rival Bank of
Montreal BMO.TO . That acquisition was blocked by regulators.
The highly regulated Canadian banking sector is active in
the mergers and acquisition space as banks seeking growth
opportunities also look to expand into the United States.
(Reporting by Nivedita Balu in Toronto; Editing by Mark Porter
and Diane Craft)
((Nivedita.Balu@thomsonreuters.com; X: @niveditabalu;))