'We can't wait to close this': HSBC takeover will bring significant cost savings, says RBC chief
Royal Bank of Canada chief executive Dave McKay says he is eager for his bank’s takeover of HSBC’s Canadian operations to close so they can begin an integration that he expects will lead to significant cost savings.
The bank CEO said the deal, which is expected to close in this quarter, is on track to save the company $740 million on costs, which works out to about 55 per cent of HSBC Canada’s overall cost base. He said this figure will firm up in coming weeks as the companies get locked in on the closing date.
“Creating a global centre of business in Vancouver was really important to us because we’re looking at consolidating work from the U.S. into Canada to save on costs,” McKay told a bank CEO conference held by RBC Capital Markets on Jan. 9.
California, in particular, can be expensive and challenging to hire bank employees, he said.
The deal to buy HSBC Canada, first announced in November 2022, represents the largest acquisition in Royal Bank’s history, and will expand its domestic operations with HSBC’s $120 billion in assets, including wealth management, personal and commercial banking. HSBC Canada is also known for its low-mortgage rate offerings, and questions about whether they will survive in the wake of the acquisition remain.
While regulatory approval of the transaction was delayed, RBC now “can’t wait to close this and get on with it,” McKay said, calling the deal good for Canada, HSBC employees and HSBC clients.
The CEO said the difference between this takeover and previous mergers is that both the operating close and financial close will occur on the same day.
This means HSBC Canada’s technology will be migrated onto RBC’s platforms on the day of the financial close, as opposed to most transactions where
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