HSBC has struck a deal to sell its Canadian business to Royal Bank of Canada for 8.4 billion dollars, as it continues to shrink its global footprint and focus on the Chinese market.
HSBC, once advertised as the world's international bank, has been struggling to navigate political pressures from both the west and Beijing after China s crackdown in Hong Kong.
The London-headquartered bank, which has been trying to appease key investors, including Chinese activist shareholder Ping An, is pushing for higher returns and calling for a spin-off of its more profitable Asian business.
The sale of its Canadian operation which has more than 130 branches and 780,000 customers follows plans to exit retail banking in the US and France last year. The Canadian business has been profitable, earning HSBC C $490 m 301 m before tax in the first half of the year, while the latter were loss making.
The sale to RBC comes amid heightened tensions between Toronto and Beijing after Huawei s chief financial officer Meng Wanzhou was arrested in Canada in 2018. HSBC was accused by Chinese state media of framing the executive and being an accomplice in her arrest.
HSBC has been criticised by western politicians for appearing to side with Chinese officials after an authoritarian crackdown on democratic protests in Hong Kong in 2020. The bank's leadership has refused to be drawn on questions about its political position on the matter.
Canada's relationship with Beijing has been under the spotlight in recent weeks with prime minister Justin Trudeau rebuked by Chinese president Xi Jinping on the sidelines of the G20 summit in Indonesia earlier this month for sharing details of a meeting where he raised concerns over China's alleged interference in Canada's 2019 federal election.
HSBC s chief executive Noel Quinn said that the decision to sell the business to RBC followed a thorough review of its strategic fit within the wider HSBC portfolio. The bank concluded that it had a relatively small share of the Canadian market and had greater opportunities for growth in other countries.
The group strategy is the same, and closing the transaction will free up additional capital to invest in growing our core businesses and returning to shareholders, Quinn said.