RBC acquisition of HSBC could reduce mortgage competition and drive rates higher, critics charge

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HSBC Canada has only a small share of the country’s mortgage market, but in recent years it has carved out a reputation as a scrappy competitor, advertising lower rates than the big banks and often forcing them to match or at least reduce their offerings.

involving four of the country’s largest banks in the late 1990s, but with a smaller player like HSBC now in the spotlight, Keldon Bester said he’s “not optimistic” that either the Competition Bureau or the minister will stop the merger despite how it could change the competitive dynamics in the mortgage market.

RBC is Canada’s biggest bank, but with five other major players, it doesn’t control an overwhelming amount of the market. A Barclays report from January pegged RBC’s share of overall domestic deposits at 22 per cent and its share of domestic lending at 21 per cent. “HSBC has been like a godsend for mortgage consumers since it started its everyday low-pricing model in 2016,” McLister said. “Its small market share really belies its impact on the market overall … its real value to the market is it gets non-HSBC customers better deals.”

HSBC Canada has more than 130 branches and about 800,000 customers, and its operations are heavily concentrated in urban areas where it often serves clients with international roots, particularly Vancouver and the lower mainland in British Columbia and the Greater Toronto Area. “We are not aware of any areas where the bureau is likely to have concerns and are not aware of any reason why competition clearance will not be received,” he said on a conference call.

For its part, RBC maintains that it is committed to taking action to combat climate change and working with its clients to reduce their carbon emissions. On the HSBC deal, spokesperson Andrew McGrath said one of the reasons the acquisition was attractive to RBC was because of HSBC’s own offerings in sustainable finance.

 

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