RBC’s $13.5-billion acquisition of HSBC’s Canadian unit cleared its final hurdle after receiving approval from Chrystia Freeland, Deputy Prime Minister and Minister of Finance.
The move comes several months after the deal received approval from the Competition Bureau.
Freeland’s approval does come with certain conditions, including the protection of HSBC Canada’s 4,000 positions for six months after the final closing date, and two years for front-line staff.
The government will also require RBC to wave certain fees for HSBC clients, including for transferring their mortgages to RBC.
In its own report released in September, the Competition highlighted the direct costs frequently associated with customers switching providers, such as “break fees on mortgages or term loans, lost interest on term deposits, fees for transferring investment accounts, and possible missed payments when moving transaction accounts.”
Other “significant commitments” the government said it has secured from RBC include:
- the establishment of a new Global Banking Hub in Vancouver resulting in 440 net-new positions
- increasing the bank’s client operations centre in Winnipeg by 10%, resulting in 100 new jobs
- providing $7 billion in financing for affordable housing construction in Canada
- continuing to provide banking services at a minimum of 33 HSBC branches for a minimum of four years
The approval of this deal marks RBC’s largest acquisition and will see the bank, already Canada’s largest with 1,200 branches and $1.8 trillion in assets, acquire HSBC Canada’s 130 branches and $134 billion in assets.
In its report, the Competition Bureau said the deal would “result in a loss of rivalry between HSBC Canada and RBC.” It had also found that HSBC Canada had “materially affected RBC offers for a number of the products examined, including mortgages…”
HSBC has consistently offered market-leading pricing among the big banks for select mortgage terms, including its Home Equity Line of Credit.
“The Bureau found numerous examples of the use of HSBC Canada mortgage rates as a reference in customers’ negotiations with RBC, or in internal RBC considerations of special rate proposals,” the report said, adding HSBC Canada mortgages were “often issued below market rates.”
Despite those observations, the Bureau also said it found mortgage offers were “most frequently driven by competition from Big Five Banks such as BMO, TD Bank, Scotiabank, or CIBC.”
The Department of Finance added that given HSBC’s market share of less than 2% in Canada, “RBC’s post-acquisition market share would not significantly increase.”
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Bank of Canada makes changes to its 2024 rate announcement schedule
The Bank of Canada has announced changes to the timing of its interest rate announcements in 2024.
Scheduled interest rate announcements will now take place at 9:45 ET, 15 minutes earlier than its previous 10 a.m. schedule. The Bank said the change is “aimed at improving market functioning by removing a conflict with the North American timing of foreign exchange option expiry.”
All meetings will also be followed by a press conference with the Governor and Senior Deputy Governor at 10:30 a.m. ET. The changes will be effective January 24, 2024, the central bank’s first scheduled rate announcement.
The following are the Bank of Canada’s 2024 meeting dates (* indicates a meeting accompanied by a Monetary Policy Report release):
- Wednesday, January 24*
- Wednesday, March 6
- Wednesday, April 10*
- Wednesday, June 5
- Wednesday, July 24*
- Wednesday, September 4
- Wednesday, October 23*
- Wednesday, December 11
Canada sees record population growth of 430k in Q3
In the third quarter, Canada’s population grew by its fastest quarterly pace since 1957 with the addition of more than 430,000 people or +1.1%.
In the first nine months of 2023, the population has grown by over 1 million people, more than any other full-year period since Confederation in 1867.
That brings the country’s population to an estimated 40.5 million people as of October 1, Statistics Canada reported. Growth rates were highest in Alberta (+1.3%), Prince Edward Island (+1.2%) and Ontario (+1.2%), while the Northwest Territories was the only jurisdiction to see a decline (-0.5%).
The continued fast pace of population growth remains a challenge for the country’s housing supply crisis, particularly in the face of a decline in new supply.
The Canada Mortgage and Housing Corporation (CMHC) recently reported that housing starts were down 22% in November to 212,624 units, down from 272,264 in October. Over the last 11 months, total housing starts are down around 8% compared to 2022.
Canadian GDP flatlines to end the year
Canada’s economy continues to stall heading towards the end of the year, with Statistics Canada reporting on Friday that gross domestic product (GDP) flatlined for the third straight month.
This is the third consecutive flat reading after September’s activity was revised down, and is below the consensus forecast for a growth rate of 0.2%.
Manufacturing output fell for the fourth time in five months (-0.6%), while wholesale trade was down 0.7%. Cooling housing activity also pushed real estate agents and brokers activity down another 6.8%.
“With today’s print and guidance for November, fourth-quarter GDP is tracking sub-1.0% quarter-on-quarter annualized,” wrote TD’s Marc Ercolao. “We expect the BoC to still remain vigilant [on inflation] and not declare victory too early. But all said, the Bank should feel a sense of comfort heading into the new year.”
Inflation and housing remain top national concerns: Nanos
A weekly poll finds inflation and the cost of housing remain among the top national concerns for Canadians.
Asked for their “most important national issue of concern,” 17.5% said inflation, 12.6% said jobs/the economy, and 11% said housing/the cost of housing, according to a weekly survey by Bloomberg and Nanos.
“Meat and potato issues continue to dominate the top unprompted national issues of concern,” noted Nik Nanos, Chief Data Scientist.
Top issues of national concern
