HSBC has struck a deal to sell its Canadian business to Royal Bank of Canada for £8.4bn as it continues to shrink its global footprint and focus on the Chinese market.
HSBC, which once advertised itself as the “world’s local bank”, has been struggling to navigate political pressures from both the west and Beijing following China’s crackdown in Hong Kong.
The London-headquartered bank, which has also been trying to appease key investors, including Chinese activist shareholder Ping An, which is pushing for higher returns and called for a spin-off of its more profitable Asian business.
The sale of its Canadian operation – which has more than 130 branches and 780,000 customers – follows plans to exit retail banking in the US and France, announced last year. But while the latter were loss making, the Canadian business has been profitable, earning HSBC C$490m (£301m) before tax in the first half of the year.
The sale to RBC comes amid heightened tensions between Ottawa and Beijing, which intensified after Huawei’s chief financial officer Meng Wanzhou was arrested in Canada in 2018. HSBC was later accused by Chinese state media of framing the executive and being an accomplice in her arrest.
Meanwhile, HSBC has been widely criticised by western politicians for appearing to side with Chinese officials following an authoritarian crackdown on democratic protests in Hong Kong in 2020. The bank’s leadership has repeatedly refused to be drawn on questions over its political position on the matter.
Canada’s relationship with Beijing has also been under the spotlight in recent weeks, with prime minister Justin Trudeau rebuked by Chinese president Xi Jinping on the sidelines of the G20 summit in Indonesia earlier this month for sharing details of a meeting where he raised concerns over China’s alleged interference in Canada’s 2019 federal election.
HSBC’s chief executive Noel Quinn said the decision to sell the business to RBC followed a thorough review on its “strategic fit” within the wider HSBC portfolio. The bank concluded it held a relatively small share of the Canadian market and had greater opportunities for growth in other countries.
“Our group strategy is unchanged, and closing this transaction will free up additional capital to invest in growing our core businesses and to return to shareholders,” Quinn said.
• This article was amended on 29 November and 2 December 2022 to refer to Ottawa as Canada’s capital, rather than Toronto; and because HSBC advertised itself as the “world’s local bank”, rather than the “world’s international bank” as an earlier version said.
