John Turley-Ewart: Why opposing the RBC-HSBC merger is a bad look for the Conservatives
Last Thursday, the House of Commons finance committee called on Finance Minister Chrystia Freeland to scrap the proposed merger between Royal Bank of Canada and HSBC Bank Canada. Led by Conservative MPs, who echoed media interviews given by Conservative leader Pierre Poilievre, the report from the 12-person committee dismissed the due diligence process used to assess proposed bank mergers.
It also signalled to foreign and Canadian investors that economic policy under a future Conservative government could be driven by political fiat rather than a rules-based process underwritten by free-market principles.
Selling a bank in Canada is a tricky thing, and has been since 1911 when, in the face of popular opposition to large numbers of bank mergers used to weed out weak banks, the federal government at the time gave the final say to the finance minister, who expected to be the first to know about a proposed merger in order to provide an informal signal to proceed with the process or shut it down.
Since then, the Canadian government has refined its approach to such deals. The country’s bank supervisor, the Office of the Superintendent of Financial Institutions (OSFI), administers the merger assessment process and makes a recommendation to the minister of finance. In addition, Canada’s Competition Bureau examines the impact on competition for retail and business customers using specific metrics that present an objective picture of a merger outcome.
In the case of the proposed sale of HSBC’s Canadian operations, the Bureau concluded that the $13-billion deal would have a “limited” impact on competition and that the change to RBC’s market share did not warrant any “significant actions” (meaning divestiture of assets) to complete
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