Canada’s largest bank says the country’s mortgage market will not change significantly in the wake of its acquisition of HSBC Holdings Plc.’s operations here, but industry watchers aren’t as sure.
Last week, Royal Bank of Canada‘s $13.5 billion deal to take over HSBC Canada won regulatory approval, with some strings attached.
Neil McLaughlin, the head of personal and commercial banking at RBC, said Canada’s mortgage market is “exceptionally competitive” with 43 lenders. HSBC Canada, the country’s seventh-largest bank, is not one of the largest players, he said.
“They only, on average, have about two per cent market share,” he said. “From that perspective, it doesn’t really change the landscape to any material degree…. Canada is very well served by just that level of competition.”
Finance Minister Chrystia Freeland’s Dec. 21 approval came with a number of conditions, which include job protections, keeping at least 33 of HSBC’s branches, transition plans for existing clients and a commitment to offer billions in financing for affordable housing.
The Competition Bureau, Canada’s antitrust watchdog, gave its approval in September, stating in a report to the finance minister that the union wouldn’t result in a “substantial lessening or prevention of competition.”
The deal to buy HSBC Canada was first announced in November 2022. It represents the largest acquisition in Royal Bank’s history, giving it the chance to expand its domestic operations with HSBC’s $120 billion in assets, which include wealth management, personal and commercial banking.
Mortgage experts, however, have been quick to point out that even though HSBC’s market share was limited, the foreign-owned bank played a key role in reducing borrowing costs through
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