Huge acquisition faces a new hurdle
The House of Commons finance committee has asked the government to reject the $13.5-billion acquisition of HSBC’s Canada unit by RBC, placing a fresh obstacle in the path of the blockbuster deal.
The committee said in its report this week that the further removal of financial sector competition could result in higher fees for Canadians who are already faced with an uncompetitive banking space.
The move, currently awaiting approval by Canada’s finance ministry and the Office of the Superintendent of Financial Institutions (OSFI), has faced mounting opposition despite being approved by the Competition Bureau at the beginning of September.
Conservative leader Pierre Poilievre was among those to speak out against the deal, criticizing “monstrous, government-protected behemoths that dominate 90% of the mortgage market, meaning very little choice for consumers,” in an interview with BNN Bloomberg.
The Competition Bureau concluded when approving the deal that the merger was unlikely to significantly lessen competition in the banking sector, although it highlighted the likely “loss of rivalry” between the two financial institutions – Canada’s largest, RBC, and seventh-biggest, HSBC Canada.
Mortgage borrowers were likely to be affected by the deal, the bureau said in September, with 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.”
An RBC spokesperson said the bank “strongly believes” that the proposed deal “offers HSBC’s Canadian clients the best possibility for continuity and stability while providing them with innovative made-in-Canada international banking solutions and advanced digital capabilities,” according to Reuters.
