London Daily

Focus on the big picture.
Thursday, Oct 09, 2025

Analysis: As British lender HSBC considers Canada unit sale, antitrust issues loom

Analysis: As British lender HSBC considers Canada unit sale, antitrust issues loom

As British lender HSBC Plc explores a potential sale of its Canadian unit, lawyers and analysts say the country's concentrated banking market could discourage big domestic banks from bidding as the government has charged the antitrust regulator to push for more competition.

An HSBC deal would be the first big banking sale in a decade in Canada, one of the world's most concentrated markets where the top six banks control about 80% of total assets, according to Reuters calculations, about double the saturation of the United States where the top five banks control 40%.

The market is so saturated that Canadian banks are expanding overseas to reduce their exposure and the Competition Bureau Canada was granted more powers to prevent further concentration.

The most likely bidders who would have the least trouble with antitrust regulators are smaller Canadian banks, analysts said, while a sale to a Chinese bank would not have antitrust problems but could be scuttled by national security concerns.

Reuters reported on Tuesday that HSBC has tapped JPMorgan Chase to handle a potential sale of Canada's seventh biggest lender by assets to beef up the parent bank's returns as demanded by its largest shareholder.

HSBC's Canadian unit could be valued around C$8 billion ($5.9 billion) to C$10 billion ($7.4 billion), analysts estimate. It generated C$952 million of pre-tax profit in 2021, according to its annual report.

The universe of potential buyers could already be small since some large Canadian lenders, including Toronto Dominion Bank (TD.TO), and Bank of Montreal (BMO.TO) are in the middle of buying assets in the United States, said James Shannan, senior equity analyst with Edward Jones.

"No banks in Canada seem to be likely candidates for this deal," Shannan said. He ruled out any bids by U.S.-based banks, saying they have been unsuccessful in expanding in Canada due to high disclosure and capital adequacy requirements.

He said Royal Bank of Canada (RY.TO), the country's biggest lender, has the capacity to do the deal but might not be attracted by HSBC's business mix.

Gabriel Dechaine, a banking analyst with National Bank of Canada (NA.TO) said in a note that regulatory hurdles will be even higher for RBC than other Canadian banks, although all would face competition issues.

RBC declined to comment, while TD and BMO did not respond to Reuters request for comment.


CHINESE BIDDER?


Smaller lenders such as National Bank of Canada (NA.TO) and some Chinese suitors are likely to show interest, analysts said.

Keefe, Bruyette & Woods said in a research note that HSBC's footprint in western Canada could give an instant diversification to Montreal-based National Bank.

National Bank, which has a market value of C$30.1 billion, declined to comment.

Dechaine said HSBC's business could be attractive for a large Chinese bank. But national security issues could complicate the process.

"Possibly, the federal government would be concerned about whether acquisition of HSBC Canada by a Chinese-controlled buyer would enable the Chinese government to have access to the Canadian banking system," said John F. Clifford, CEO McMillan LLP.

"I can easily envision the federal government taking a very deep dive to assess the potential security and public interest concerns."

HSBC Bank Canada is the biggest international player in Canada, with commercial banking, personal banking, investment banking and markets services businesses. Still, its $120 billion assets in Canada are much smaller than those of National Bank, Canada's sixth largest, with assets of C$387 billion.

Consumer advocates have long complained about high fees for everyday banking, and would probably oppose further consolidation. The average monthly fee on a Canadian checking account is $11, compared with $7 in the United States, according to a Reuters analysis that excluded student accounts.

The Competition Bureau Canada said in an email to Reuters that if the federal ministry of finance in public interest certifies a banking merger, there will not be any scope for litigation.

In 1998, the government of Canada blocked RBC's proposed acquisition of BMO, and TD and CIBC merger on grounds that the deal would lead to an unacceptable concentration of economic power.

Since then the only sizeable banking deal to be approved was Scotiabank's C$3.1 billion purchase of ING Groep's Canadian online bank in 2012.

Nigel D'Souza, an investment analyst with Veritas Investment Research, said HSBC is unlikely to find a single buyer that can pass antitrust muster.

"So I think the most likely outcome for the deal to actually get done is for HSBC assets to be broken up and split across several of the larger banks," he added.

($1 = 1.3507 Canadian dollars)

Newsletter

Related Articles

0:00
0:00
Close
France: Less Than a Month After His Appointment, the New French Prime Minister Resigns
Hungarian Prime Minister Viktor Orbán stated that Hungary will not adopt the euro because the European Union is falling apart.
Sarah Mullally Becomes First Woman Appointed Archbishop of Canterbury
Mayor in western Germany in intensive care after stabbing
Australian government pays Deloitte nearly half a million dollars for a report built on fabricated quotes, fake citations, and AI-generated nonsense.
US Prosecutors Gained Legal Approval to Hack Telegram Servers
Macron Faces Intensifying Pressure to Resign or Trigger New Elections Amid France’s Political Turmoil
Standard Chartered Names Roberto Hoornweg as Sole Head of Corporate & Investment Banking
UK Asylum Housing Firm Faces Backlash Over £187 Million Profits and Poor Living Conditions
UK Police Crack Major Gang in Smuggling of up to 40,000 Stolen Phones to China
BYD’s UK Sales Soar Nearly Nine-Fold, Making Britain Its Biggest Market Outside China
Trump Proposes Farm Bailout from Tariff Revenues Amid Backlash from Other Industries
FIFA Accuses Malaysia of Forging Citizenship Documents, Suspends Seven Footballers
Latvia to Bar Tourist and Occasional Buses to Russia and Belarus Until 2026
A Dollar Coin Featuring Trump’s Portrait Expected to Be Issued Next Year
Australia Orders X to Block Murder Videos, Citing Online Safety and Public Exposure
Three Scientists Awarded Nobel Prize in Medicine for Discovery of Immune Self-Tolerance Mechanism
OpenAI and AMD Forge Landmark AI-Chip Alliance with Equity Option
Munich Airport Reopens After Second Drone Shutdown
France Names New Government Amid Political Crisis
Trump Stands Firm in Shutdown Showdown and Declares War on Drug Cartels — Turning Crisis into Opportunity
Surge of U.S. Billionaires Transforms London’s Peninsula Apartments into Ultra-Luxury Stronghold
Pro Europe and Anti-War Babiš Poised to Return to Power After Czech Parliamentary Vote
Jeff Bezos Calls AI Surge a ‘Good’ Bubble, Urges Focus on Lasting Innovation
Japan’s Ruling Party Chooses Sanae Takaichi, Clearing Path to First Female Prime Minister
Sean ‘Diddy’ Combs Sentenced to Fifty Months in Prison Following Prostitution Conviction
Taylor Swift’s ‘Showgirl’ Launch Extends Billion-Dollar Empire
Trump Administration Launches “TrumpRx” Plan to Enable Direct Drug Sales at Deep Discounts
Trump Announces Intention to Impose 100 Percent Tariff on Foreign-Made Films
Altman Says GPT-5 Already Outpaces Him, Warns AI Could Automate 40% of Work
Singapore and Hong Kong Vie to Dominate Asia’s Rising Gold Trade
Trump Organization Teams with Saudi Developer on $1 Billion Trump Plaza in Jeddah
Manhattan Sees Surge in Office-to-Housing Conversions, Highest Since 2008
Switzerland and U.S. Issue Joint Assurance Against Currency Manipulation
Electronic Arts to Be Taken Private in Historic $55 Billion Buyout
Thomas Jacob Sanford Named as Suspect in Deadly Michigan Church Shooting and Arson
Russian Research Vessel 'Yantar' Tracked Mapping Europe’s Subsea Cables, Raising Security Alarms
New York Man Arrested After On-Air Confession to 2017 Parents’ Murders
U.S. Defense Chief Orders Sudden Summit of Hundreds of Generals and Admirals
Global Cruise Industry Posts Dramatic Comeback with 34.6 Million Passengers in 2024
Trump Claims FBI Planted 274 Agents at Capitol Riot, Citing Unverified Reports
India: Internet Suspended in Bareilly Amid Communal Clashes Between Muslims and Hindus
Supreme Court Extends Freeze on Nearly $5 Billion in U.S. Foreign Aid at Trump’s Request
Archaeologists Recover Statues and Temples from 2,000-Year-Old Sunken City off Alexandria
China Deploys 2,000 Workers to Spain to Build Major EV Battery Factory, Raising European Dependence
Speed Takes Over: How Drive-Through Coffee Chains Are Rewriting U.S. Coffee Culture
U.S. Demands Brussels Scrutinize Digital Rules to Prevent Bias Against American Tech
Ringo Starr Champions Enduring Beatles Legacy While Debuting Las Vegas Art Show
Private Equity’s Fundraising Surge Triggers Concern of European Market Shake-Out
Colombian President Petro Vows to Mobilize Volunteers for Gaza and Joins List of Fighters
×