RBC is already the country’s largest bank by assets ($1.71T), but just because you’re the biggest doesn’t mean you can’t get even bigger.
What happened: RBC agreed to buy HSBC Canada for $13.5 billion, in what would be both a rare domestic acquisition and the biggest banking deal in Canadian history, as the latter focuses on investing in its Asia presence, per Bloomberg.
- Since October, HSBC’s largest shareholder has been pressuring the bank to offload its Canadian arm, leaving a big question mark hanging over Bay Street as the country’s Big Five banks mulled over whether they’d step forward as the buyer.
Why it matters: Assuming it’s approved by regulators, the deal would widen RBC’s already-huge slice of Canada’s banking pie (followed closely by TD, then Scotiabank, BMO and CIBC).
- RBC would also gain a commercial banking franchise with international ties (as Canada pushes to welcome newcomers) and bulk up its retail presence out West.
Zoom out: According to Bloomberg’s Kevin Orland and Harry Wilson, Canada’s biggest banks have focused more of their attention on US expansion recently, with the industry’s two largest acquisitions (both within the last year, by BMO and TD) being of US firms.