HSBC is looking to sell its business in Canada, worth billions of dollars and one of the largest international banking brands in the country, as it intends to boost returns as demanded by its biggest shareholder.
The bank said in an emailed statement on October 4:
“We are currently reviewing our strategic options with respect to our wholly owned subsidiary in Canada.”
HSBC refused to comment on the possible valuation of the business, but it had assets of C$125 billion ($92 billion) as of June 30 and total equity of C$5.8 billion, its latest financial results showed.
The business, unlike some others HSBC has attempted to abandon in recent years, is lucrative, making C$490 million before tax in the first six months of 2022. That implies the lender would intend to charge any buyer a large premium to its current valuation.
The review is at an early stage, the spokesperson said, and no definitive decision had been reached, but one alternative would be a sale of the lender’s 100% stake in HSBC Bank Canada. The disposal would represent the most recent in a string of divestments at HSBC, which once labeled itself as the “world’s local bank”.
HSBC in May 2021 declared it would quit mass-market banking in the United States, and in June it said it would dispose of its French retail business as part of a plan to increase profits and resist calls from top shareholder China’s Ping An Insurance Group to branch out its Asian business.
If HSBC’s review in Canada were to result in the 100% sale of its unit there, that would mark a more complete departure from the country than those other divestments. HSBC Bank Canada contains four divisions covering HSBC’s investment banking, personal banking, commercial banking, and markets services business in the country.
Buy Crypto NowThe bank is the country’s seventh-biggest by assets, according to Refinitiv data, and the largest international player in a market dominated by domestic incumbents. Ping An in April started a campaign pushing the British bank to explore alternatives including listing its Asia business to boost shareholder returns. Ping An has said it is not an activist investor.
News of HSBC’s review of its Canadian business was initially delivered by Sky.
($1 = 1.3644 Canadian dollars)
