HSBC completes sale of Canadian arm to Royal Bank of Canada

Shares of HSBC got a boost on Tuesday when it completed the sale of its Canadian operations to Royal Bank of Canada (RBC).

Europe’s largest bank, which is focused on expanding its business across Asia, expects to make an estimated profit of $4.9 billion (£3.9 billion) from the deal in its first quarter results.

The company plans to pay shareholders a special dividend of $0.21 per share, which it will pay in addition to a proposed interim dividend in June if approved by investors.

Meanwhile, RBC, Canada’s largest lender by assets, will add another 4,500 employees and more than 780,000 additional residential and commercial customers to the deal.

To appease regulators, the group has also pledged to provide $7 billion in financing to build and renovate affordable housing, donate 1 percent of its Canadian net pre-tax income each year and establish a “global banking center” in Vancouver build.

HSBC originally agreed in November 2022 to sell its Canadian arm for $10.2 billion, following pressure from prominent shareholder and insurer Ping An to split its Asian and Western operations.

Noel Quinn, CEO of HSBC, said the Canadian unit is a “great business with exceptional people and customers, and I have no doubt it will thrive as part of RBC.”

‘Completing this deal is another important milestone in HSBC’s transformation, and it will provide capital that will enable us to grow our core business and reward our shareholders for their loyalty.’

In recent years the FTSE 100 company has offloaded its loss-making retail banking networks in the US and France.

It took a €3 billion hit from the sale of the latter business for a symbolic €1 to Crédit Commercial de France, a subsidiary of My Money Group.

HSBC is also planning to sell its operations in Russia after vowing to leave the country following the escalation of the war in Ukraine.

In February, Russian President Vladimir Putin signed a decree allowing Expobank, a private company, to acquire the division.

Two days later, HSBC announced its pre-tax profits had risen 78 percent to a record £24 billion by 2023, thanks to rising interest rates around the world.

However, the bank reported that fourth-quarter profit fell about 80 percent to $1 billion after it took a $3 billion impairment on its stake in China’s Bank of Communications.

HSBC Holdings shares were 1.1 per cent higher at 625.6p on Tuesday morning and have grown by around 12 per cent in the past year.