BY AGENCE FRANCE-PRESSE – AFP
British multinational bank HSBC has settled on an agreement to sell its Canadian division to Royal Bank of Canada (RBC) for $10.1 billion, the company announced on Tuesday.
The large sale comes after Europe’s largest bank faced calls from its biggest shareholder Ping An Insurance Group to cut costs and shift more resources to Asia.
HSBC added in a statement that it would use the funds to invest in its core business and return cash to investors.
“We decided to sell following a thorough review of the business … and concluded that there was a material value upside from selling,” said chief executive Noel Quinn.
The Canadian divestment is expected to be completed in late 2023.
“HSBC Canada offers the opportunity to add a complementary business and client base in the market we know best and where we can deliver strong returns and client value,” RBC President and CEO Dave McKay said in a separate statement.
“This also positions us as the bank of choice for commercial clients with international needs, newcomers to Canada and affluent clients who need global banking and wealth management capabilities,” it added.
China’s Ping An, which has a 9.2% stake in HSBC pressured the British giant to spin off its Asian operations in a bid to unlock shareholder value amid tensions between Beijing and the West.
The spin-off demands came earlier this year even though the bank has previously hinted it wants to keep its current structure while continuing a pivot to Asia.