Royal Bank of Canada has agreed to buy the Canadian arm of the mutational bank HSBC for $13.5 billion in cash.
RBC chief executive Dave McKay said the deal provides an opportunity to add a complementary business and client base.
“This also positions us as the bank of choice for business clients with international needs, newcomers to Canada and affluent clients who need global banking and wealth management capabilities,” McKay said in a statement Tuesday.
“It will help us better serve global clients looking to invest and grow in Canada.”
The Canadian arm of British-based HSBC has been put up for sale this year as the parent company has faced pressure from its biggest shareholder, China’s insurance group Ping An, to increase yields.
130 offices in Canada
“The deal makes strategic sense for both parties and RBC will take the business to the next level,” HSBC Group Chief Executive Noel Quinn said in a statement.
“Our group strategy has not changed, and closing this transaction will free up additional capital to invest in the growth of our core businesses and return to shareholders.”
HSBC has had operations in Canada since 1981 and currently has approximately 130 branches and 4,200 employees.
According to its most recent quarterly report, HSBC Canada had assets worth $125 billion at the end of June and posted operating income of more than $1.1 billion in the first half of this year. HSBC holds about two percent of all bank deposits and mortgages in Canada.
The deal is expected to close next year, pending regulatory and shareholder approval.