Royal Bank of Canada has agreed to buy the Canadian arm of mutinational bank HSBC for $13.5 billion in cash.
RBC chief executive Dave McKay said the deal offers the opportunity to add a complementary business and client base.
"This also positions us as the bank of choice for commercial clients with international needs, newcomers to Canada and affluent clients who need global banking and wealth management capabilities," McKay said in a statement Tuesday.
"It will help us better serve global clients looking to invest and grow in Canada."
The Canadian arm of British-based HSBC has been up for sale this year because the parent company has been facing pressure from its largest shareholder, China's Ping An Insurance Group, to boost returns.
130 branches in Canada
"The deal makes strategic sense for both parties, and RBC will take the business to the next level," HSBC Group chief executive Noel Quinn said in a statement.
"Our group strategy is unchanged, and closing this transaction will free up additional capital to invest in growing our core businesses and to return to shareholders."
HSBC has had operations in Canada since 1981 and currently has approximately 130 branches and 4,200 employees.
According to its most recent quarterly report, HSBC Canada had $125 billion worth of assets as of the end of June, and posted an operating income of more than $1.1 billion in the first half of this year. HSBC has about two per cent of all the bank deposits and mortgages in Canada.
The deal is expected to close next year, pending regulatory and shareholder approval.
