The Competition Bureau in Ottawa has approved Royal Bank of Canada’s (RY) $13.5 billion takeover of HSBC Bank Canada.
In its ruling, the bureau said it found that the sale was not likely to result in “substantial lessening” of competition in Canada’s banking sector.
However, in a report to the federal finance minister, the Competition Bureau noted that financial services in Canada are heavily concentrated in Canada’s five largest banks, of which Royal Bank is the largest.
The Competition Bureau also said that “conditions in certain markets may facilitate coordinated behaviour among (banking) firms.”
The finance minister must now give the takeover of HSBC Bank Canada final approval for the deal to be concluded.
Royal Bank has said that it hopes to complete the acquisition of HSBC Bank Canada in the first quarter of 2024.
HSBC Bank Canada has about 130 branches and over 750,000 retail and commercial customers nationwide.
Parent company HSBC Holdings decided to sell its Canadian operations to Royal Bank as it exits the country completely, citing low market share.
Royal Bank’s stock is flat (up 0.29%) over the last 12 months at $122.85 per share.
