The deal has been approved by the Competition Bureau
RBC’s proposed multibillion-dollar takeover of HSBC Bank Canada has cleared a significant regulatory hurdle after securing approval from the Competition Bureau.
The bureau has concluded that the $13.5-billion merger, which will see Canada’s largest bank take over the seventh biggest, is unlikely to significantly lessen competition in the banking sector.
The merger would, however, result in a “loss of rivalry” between the two financial institutions, the bureau said, with relevant financial services markets “concentrated” and many characterized by “high barriers to entry and expansion.”
Mortgage borrowers are among the customer groups likely to be impacted by the acquisition, the bureau added.
“The bureau found evidence of instances where HSBC Canada had materially affected RBC offers for a number of the products examined, including mortgages, high interest savings accounts, GICs and business loans and accounts,” it said.
Still, it concluded that Canada’s other banking giants are effective competitors, with HSBC Canada’s competitive impact limited when compared with the country’s top financial institutions.
The deal, which was first announced by RBC last November, is still subject to approval by the banking regulator and federal finance minister, with the Bureau’s report set to factor into the latter’s decision-making process on the matter.
