30 Nov 2022

Raft of top firms called in as Royal Bank of Canada buys HSBC Canada in ‘once in a generation’ $13.5bn cash deal

Allen & Overy, Wachtell Lipton Rosen & Katz among those acting for RBC as Linklaters advises HSBC’s Canada arm

Vancouver, B.C. April 10, 2019. The Signing in front of the RBC Royal Bank on West Hastings Street

Mitch Hutchinson; Shutterstock

Allen & Overy (A&O), Wachtell Lipton Rosen & Katz and Linklaters are among the firms acting in Royal Bank of Canada’s purchase of HSBC Bank Canada for C$13.5bn. 

The deal marks the largest ever bank transaction in Canada and will see RBC acquire all of HSBC Canada’s common shares in an all-cash deal. 

RBC president and CEO, Dave McKay, described the acquisition as a “once in a generation opportunity” that would add a complementary business and client base. 

“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,” McKay said. “It will help us better serve global clients looking to invest and grow in Canada."

A&O and Wachtell are advising RBC on the deal alongside Canadian firm Blake Cassels & Graydon, a member of the country’s ‘seven sisters’ band of elite firms. RBC Capital Markets is serving as lead and primary financial advisor while Goldman Sachs is providing secondary financial advice on certain matters.

The Wachtell team is led by executive committee co-chair David Herlihy, corporate partner Jacob Kling and corporate associate Eric Feinstein. Also working on the deal are corporate associate Fabiola Urdaneta and banking regulatory partner Richard King. 

Meantime, a Linklaters corporate team led by partner Derek Tong is advising HSBC Canada on the deal. The team also includes managing associates Katharine Collard and Matthew Halliday and associates Eleanor Keighley Elstub, Nick Chung and Tom Brennan. All are based in London. 

The acquisition is RBC’s largest to date and represents a rare opportunity for it to add market share in a banking landscape dominated by Canada's so-called Big Six, of which RBC is itself the largest. Its acquisition of HSBC Canada, the country’s seventh-largest, will add 130 branches and C$134bn in assets to its own more than 1,200 branches and C$1.8trn in assets. 

For its part, HSBC is selling its Canadian arm amid pressure from key shareholders, including the largest – China’s Ping An Insurance Group – to boost returns. 

The London-based bank has been winding down its exposure in the US recently – selling off its loss-making mass market retail division last year and cutting its branches there from almost 150 to 58 – and also announced plans last year to exit retail banking in France. 

HSBC’s chief executive, Noel Quinn, said the decision to sell the Canadian business to RBC followed a review of its “strategic fit” within HSBC’s wider portfolio. The bank concluded it held a relatively low share of the Canadian market and had better opportunities for growth elsewhere. 

“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.

HSBC said it expected the sale to be closed by the end of next year subject to regulatory approval. 

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