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Conservative Leader Pierre Poilievre rises during Question Period in the House of Commons on Parliament Hill in Ottawa on Oct. 19. The Competition Bureau greenlit RBC’s takeover of HSBC Canada in September.Justin Tang/The Canadian Press

Conservative Leader Pierre Poilievre is calling for the federal government to reject Royal Bank of Canada’s RY-T proposed takeover of HSBC Bank Canada, saying the deal would reduce banking competition at a time when homeowners are struggling with high borrowing costs.

In an interview with The Globe and Mail Thursday, Mr. Poilievre said blocking the deal is a clear step the government could take to address affordability concerns.

“If the biggest bank in Canada simply buys up a growing smaller player, then there’s no hope of ever having more competition in Canadian banking,” he said. “If you remove HSBC, then you’ll be removing downward pressure on lending rates.”

Mr. Poilievre did not say what he believed would become of HSBC Canada if Ottawa were to terminate RBC’s deal, which it clinched after Britain-based banking giant HSBC Holdings PLC HSBC-N decided to sell off its Canadian unit. If RBC is unable to buy HSBC Canada, the British lender could simply relaunch the bidding process.

Canada’s Competition Bureau greenlit RBC’s takeover of HSBC Canada in September. It was the first major approval required for the country’s largest lender to clinch the biggest domestic banking deal on record. The takeover would bolster RBC’s dominance over its rivals by tens of billions of dollars in loans and deposits.

The country’s big banks had been eyeing HSBC Canada for years, coveting its strength in commercial lending and mortgages. London-based HSBC put its Canadian subsidiary on the auction block in October, 2022, as part of a strategic review, offering its competitors the rare opportunity to substantially grow their operations domestically through an acquisition. In recent years, HSBC has also trimmed its operations in other regions, including Brazil, France and the U.S., to reallocate resources to areas where it has greater growth opportunities.

RBC emerged as the victor with a $13.5-billion offer – the most a Canadian bank has ever paid for a domestic competitor, at 2.5 times HSBC Canada’s tangible book value.

RBC spokesperson Andrew McGrath said in an e-mailed statement that the deal will keep financial sector jobs in Canada and provide a comfortable transition for HSBC Canada’s clients.

“HSBC Canada’s parent company has announced their decision to exit the Canadian marketplace, leading to uncertainty for HSBC’s 700,000 Canadian clients,” Mr. McGrath said. “We strongly believe that RBC’s proposed acquisition offers HSBC’s Canadian clients the best possibility for continuity and stability, while providing them with innovative made-in-Canada international banking solutions and advanced digital capabilities.”

In June, the federal Finance Department launched a public consultation on the deal to collect feedback on how it could affect the financial sector. The takeover requires approval from Canada’s banking regulator, the Office of the Superintendent of Financial Institutions. And it also needs sign-off from the Finance Minister, who has the final say.

Many banking analysts expect the deal to close. In a note to clients in September, Canadian Imperial Bank of Commerce analyst Paul Holden said there should not be “any significant hurdles” in securing further regulatory approvals.

Katherine Cuplinskas, a spokesperson for Finance Minister Chrystia Freeland, responded to a request for comment by pointing to a statement the minister issued nearly a year ago when the plan was first announced.

“The minister of finance’s decision on the acquisition will be informed by all required regulatory review processes, including those administered by the Office of the Superintendent of Financial Institutions and the Competition Bureau,” Ms. Cuplinskas said.

The Liberal government is also facing calls from the NDP to reject the merger.

NDP MP Laurel Collins sent a letter this month to Ms. Freeland urging her to stop the merger.

The letter said HSBC has been an environmental leader, while RBC has been singled out by environmental organizations as the world’s largest financier of fossil fuels.

In April, a report from a coalition of environmental groups said that last year RBC was the biggest fossil fuel financier globally. The rest of Canada’s big banks ranked in the top 20 on the list. In December, HSBC said it would stop financing new oil and gas developments.

“If RBC were to acquire HSBC under the current conditions, it would undo the work that has been done by HSBC to tackle climate change,” Ms. Collins wrote. The NDP also suggested that blocking the merger could assist with the current high cost of living faced by Canadians.

In the interview, Mr. Poilievre criticized the Competition Bureau’s recent finding that the merger is not likely to result in a substantial lessening of competition. The bureau received more than 1,500 submissions from Canadians and said that market share changes would not exceed the level where the Competition Commissioner would decide to challenge it.

“I don’t understand how the Competition Bureau found that the deal would not be a threat to competition, even though it reduces rivalry,” Mr. Poilievre said.

Mr. Poilievre said he supports reform to the Competition Act, but that he doesn’t think the proposed changes to the act that are currently before Parliament would make a difference in this situation. Those changes are contained in Bill C-56, which would give the government the power to direct the Commissioner of Competition to conduct inquiries into the state of competition in markets or industries.

“There’s no question we need to reform the Competition Act to bring more choice and competition for consumers generally,” he said. “In this instance, though, the Finance Minister has the power to block this merger, and she should use that power.”

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