Royal Bank of Canada's proposed $13.5-billion takeover of HSBC Bank Canada will face scrutiny from Canada's competition watchdogs in the year ahead, but critics say their leash is too short while efforts in the U.S. point to potential ways of doing it…
Royal Bank of Canada's proposed $13.5-billion takeover of HSBC Bank Canada will face scrutiny from Canada's competition watchdogs in the year ahead, but critics say their leash is too short while efforts in the U.S. point to potential ways of doing it better.
RBC is well aware of the bureau's guidelines, with chief executive Dave McKay noting when announcing the deal that HSBC Canada only makes up about two per cent of the domestic banking market. “Even it’s very obvious it's going to have anticompetitive effects, or harms, the efficiencies defence is kind of a veto power saying, 'Well, it doesn't matter.'”
To help placate regulators though, the banks have made numerous commitments including that neither plan to close branches, which provide a physical commitment to maintaining choice in a neighbourhood. The revival of the agreements in recent years has been spearheaded by the National Community Reinvestment Coalition as a way to ensure U.S. laws around fair lending are carried out.
When announcing the merger, McKay said HSBC clients will benefit from coming into RBC's fold, while others will benefit through the higher profits of RBC, as he noted that it’s one of Canada’s highest taxpayers and that each year it donates one per cent of pre-tax Canadian net income to communities in need. The bank also distributes a significant portion of its earnings to shareholders, he said.
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