The proposed C$13.5 billion ($9.9 billion) acquisition of HSBC Holdings Plc (LON:HSBA)'s Canadian operations by Royal Bank of Canada (RBC) has come under scrutiny from various quarters, including Canada's Conservative Party leader Pierre Poilievre, over concerns about reduced competition in the mortgage market and dominance. The deal, which would be RBC's largest ever, includes HSBC's 128 Canadian branches and C$120 billion in assets.
On Friday, Poilievre urged Finance Minister Chrystia Freeland to reject the deal, a stance backed by his lead in public opinion polls over Prime Minister Justin Trudeau’s Liberal Party. His call echoed the concerns of over 1,500 Canadians and consumer advocates who fear the acquisition could lead to higher mortgage rates due to reduced pressure on larger banks to offer competitive rates like those of HSBC Canada.
The acquisition has also raised environmental concerns. Activists argue that RBC's policies are less climate-friendly than HSBC's, adding another layer of complexity to the proposed deal. This comes amidst a 1.1% drop in RBC shares on Friday.
Despite these objections, the deal has received approval from the Competition Bureau. However, it has left HSBC's 700,000 Canadian clients facing uncertainty due to HSBC's exit from the Canadian market. The deal also promises repatriation of overseas roles supporting HSBC's Canadian operations.
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