HSBC shares were handed a boost on Tuesday as it finalised the sale of its Canadian business to the Royal Bank of Canada (RBC).
Europe’s largest bank, which is focusing efforts on expanding operations across Asia, expects to reap an estimated $4.9billion (£3.9billion) gain from the transaction in its first-quarter results.
It intends to hand shareholders a $0.21 per share special dividend, which it will pay alongside a proposed interim dividend in June if approved by investors.
Completed: HSBC has finalised the sale of its Canadian business to the Royal Bank of Canada
Meanwhile, RBC, Canada’s biggest lender by assets, will add another 4,500 staff and more than 780,000 extra retail and commercial customers from the deal.
To satisfy regulators, the group has also pledged to provide $7billion in financing to build and renovate affordable housing, donate 1 per cent of its Canadian pre-tax net income each year and build a ‘global banking hub’ in Vancouver.
HSBC originally agreed in November 2022 to sell its Canadian arm for $10.2billion amid pressure from prominent shareholder and insurer Ping An to split its Asian and Western operations.
Noel Quinn, chief executive of HSBC, said the Canadian unit is a ‘great business with exceptional people and clients, and I have no doubt it will thrive as part of RBC.
‘Completing this deal is another important milestone in HSBC’s transformation, and it will provide capital that will enable us to grow our core businesses and reward our shareholders for their loyalty.’
In recent years, the FTSE 100 company has offloaded its loss-making retail banking networks in the US and France.
It incurred a €3billion hit from selling the latter operations for a token €1 to Crédit Commercial de France, a subsidiary of My Money Group.
HSBC also plans to sell its business in Russia, having pledged to depart the country following the escalation of the Ukraine war.
In February, Russian President Vladimir Putin signed a decree allowing Expobank, a privately owned company, to acquire the division.
Two days later, HSBC revealed its pre-tax profits soared by 78 per cent to a record £24billion in 2023 thanks to rising interest rates across the globe.
However, the bank reported its fourth-quarter profits slumped by about 80 per cent to $1billion after it took a $3billion impairment charge from its stake in China’s Bank of Communications.
HSBC Holdings shares were 1.1 per cent higher at 625.6p on Tuesday morning and have grown by approximately 12 per cent over the past year.
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