In addition to further consolidating its domestic position, RBC’s latest HSBC deal will also bank on growth driven by a global wave of migration, especially by wealthy individuals in Asia. 

On Wednesday, HSBC announced that it had agreed to sell its Canadian business to RBC for around $10 billion, marking the largest domestic bank deal ever in the country’s history. The transaction is expected to add 6 percent to RBC's estimated 2024 consensus earnings per share and achieve about $550 million in annual cost savings by the same year. 

While the Canadian lender is expected to obtain nearly $100 billion in assets from HSBC – alongside 130 branches and the «vast majority» of the 4,200 full-time employees – the client base of 780,000 and its prospects will be a major driver of future growth.

Newcomers to Canada

As part of the deal, HSBC moving forward will refer clients who are moving to Canada to RBC. Once known as the «Hong Kong bank», HSBC’s massive base of Hongkongers and headline exodus figures immediately comes to mind (1130,000 people left the city in the 12 months ending in August, according to census data). Official figures show that over 4,900 Hongkongers came to Canada over the last five years, bringing the total to more than 76,000.

But this represents just a fraction of total movers and interestingly, Asia – HSBC’s home market – is the dominant source. According to the IRCC (Immigration, Refugees and Citizenship Canada), India was the top origin of movers at nearly 128,000 (32 percent of total permanent residents admitted) followed by China’s 31,000 (8 percent) and the Philippines’ 18,000 (4 percent). Overall, Canada aims to attract 500,000 immigrants per year by 2025, up from 405,000 last year.

«[The deal] positions us as the bank of choice for […] newcomers to Canada,» said RBC president and chief executive Dave McKay in a statement detailing target clients that will benefit from the new acquisition. 

Existing Residents

And of the existing 780,000 clients from HSBC Canada, many will also be existing Canadian citizens abroad who may choose to move back or ramp up their related financial activities. In fact, this is where Hongkongers actually play a dominant role. Currently, there are an estimated 300,000 Canadian citizens living in Hong Kong with the vast majority being former immigrants or their children. 

Incidentally, there are also cross-selling opportunities for this segment as only 8 percent of HSBC Canada clients have a full suite of transaction, investment, borrowing and credit card accounts compared to 19 percent at RBC. 

Asia’s Global Families

The strategy of capitalizing on opportunities related to clients with worldwide banking needs is not new for RBC. This is especially the case in the region, where it has repeatedly announced ambitions to serve Asia’s global families, defined as mobile households with high net worth individuals that are particularly linked to Canada, US and UK. 

«HSBC Canada's wealth and personal banking business serves an affluent client base, with particular strength in meeting the needs of international clients with connections to Canada,» RBC said in a statement. 

«[HSBC Canada] will help us better serve global clients looking to invest and grow in Canada,» McKay added.