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HSBC agrees sale of Canada operation.

 

HSBC has agreed to sell its Canadian business to the Royal Bank of Canada for $10bn as it scales back its global network outside Asia amid pressure from its largest investor to break up. Shares in HSBC rose almost 5 per cent on the deal news, with the bank saying that it may return some proceeds to investors. The deal, if approved by regulators, would bolster the position of RBC, Canada’s most significant asset lender. «Following a thorough review of the business, which assessed its relative position within the Canadian market and its strategic fit within the HSBC portfolio, concluded that there was a material value upside from selling the business,» said HSBC chief executive Noel Quinn.

The Canada sale follows similar exits of loss making consumer operations in France and the US. HSBC took a $3bn hit when it sold its French retail network to Cerberus for €1 last year. The transaction is expected to be completed in late 2023, and the board plans to «proactively» consider how much surplus capital created through this transaction will be returned to investors via a one-off dividend, share buybacks or a combination of the two. «This transaction is a clear positive for HSBC,» said Jefferies analyst Joseph Dickerson.

« The related shareholder repatriation may serve to appease those investors still frustrated that dividends were curtailed in early 2020». Because of competition concerns in Canada’s highly concentrated banking market, most lenders have preferred expansion in the US.

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  1. Brandon30 November 2022 at 14:11

    Considering the pressure HSBC was under recently I think this move was to be expected. Is it a smart move right now? Maybe. Only time will tell.

    ReplyDelete

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