QUESTION PERIOD — Finance
Banking Sector
February 8, 2024
My question is to the Government Representative in the Senate. Senator Gold, in December 2023, the sale of HSBC to RBC was approved by Finance Minister Chrystia Freeland. However, there is a concern this will result in decreased competition in what is already a heavily concentrated banking sector. Mortgage strategist Robert McLister said HSBC had a different model than the major banks and that the larger banks were regularly 20 to 80-plus basis points higher on fixed and variable rates. He said that for Canadians who count one of the big banks as their preferred lender, the key benefit of HSBC was the gift it gave borrowers in leverage.
At a time when Canadians are concerned about their ability to purchase a home and given the high mortgage rates, was this the time for the finance minister to approve the sale?
Thank you, senator, for your question. The decision of the Minister of Finance to approve the acquisition followed the advice and comprehensive analysis of relevant federal departments and agencies, including the Competition Bureau and the Office of the Superintendent of Financial Institutions. I understand that as part of the approval, the Minister of Finance imposed strict conditions on RBC including continuing to provide banking services to the minimum of 33 HSBC branches as well as all ATMs in these branches for four years; to protect HSBC’s current Canadian workforce; to create new jobs, including 440 new jobs in B.C. and 200 new jobs in Manitoba; and, finally, to provide $7 billion in financing for affordable housing construction across Canada to support the construction of an estimated 25,000 new homes.
Senator Gold, even the House of Commons Finance Committee has called on the government to reject this deal. The report from the committee stated:
. . . removing competition in the financial sector could raise banking fees for Canadians who already pay more for financial services due to an already uncompetitive financial sector . . . .
How is the government planning to ensure that competition remains strong in the banking sector?
Thank you for your question. I understand that in order to continue to protect Canadian consumers and uphold competition and stability in the financial sector, the government has launched new consultations on strengthening competition in that sector.
I have also been informed that, in this process, views will be sought on how the current acquisition or merger process could be enhanced to support greater competition and consider potential additional measures to address market concentration as well as barriers to entry or expansion.
