HSBC to sell Canadian unit to RBC for $10bn

HSBC is to sell its Canadian business to Royal Bank of Canada for $10bn, as the lender reshapes its global network to focus on Asia and other growth regions.

The cash consideration for the unit came to C$13.5bn ($10bn), HSBC said on Tuesday, adding that it estimated it would make a pre-tax gain of about $5.7bn.

HSBC’s shares jumped nearly 5 per cent on the news.

“The deal makes strategic sense for both parties,” said HSBC chief executive Noel Quinn. “RBC will take the business to the next level.”

HSBC last month launched a review of the Canadian business, as the group resisted pressure from its largest shareholder Ping An to split its Asian and western operations. HSBC was working with bankers at JPMorgan to seek potential buyers.

The HSBC board plans to “proactively” consider how much surplus capital created through this transaction will be returned to investors via a one-off dividend, share buybacks or a combination of the two.

The transaction is expected to be completed in late 2023.