The Competition Bureau says RBC’s proposed acquisition of HSBC Bank Canada can go through, clearing a major hurdle for the $13.5 billion banking takeover.

The bureau said it found the sale was not likely to result in “substantial lessening or prevention of competition under the Competition Act.”

However, in a report to Finance Minister Chrystia Freeland, the bureau said it found that the banking purchase would result in “a loss of rivalry between Canada’s largest and seventh largest banks.” 

It also noted that financial services markets in Canada are concentrated, that Canada’s five largest banks provide the majority of banking services to Canadians, and highlighted “high barriers to entry and expansion” in many Canadian markets.
The bureau found that “conditions in certain markets may facilitate coordinated behaviour among firms.”

Freeland must now give the sale her final approval in order for it to go through.

While the Competition Bureau assessed the sale for possible anti-competitive effects, Freeland can take other considerations in her decision and can impose conditions on the sale.

A public consultation on the sale was extended to July 21 after some emailed submissions to the government weren’t received, raising concerns by some environmental groups who are worried about the potential climate impacts of the sale.

In a statement posted to LinkedIn, RBC’s president and CEO Dave McKay called the decision “an important first step in the regulatory approval process.”

“Our journey toward the closing of the transaction will continue as we now await a recommendation from OSFI and an approval from the Minister of Finance,” McKay wrote.

“In the meantime, our teams will work on preparing our bank for the anticipated completion of this acquisition in the first calendar quarter of 2024.”