29th Nov 2022 12:34
(Alliance News) - HSBC Holdings PLC on Tuesday said its subsidiary HSBC Overseas Holdings UK Ltd agreed to sell its Canadian banking business to the Royal Bank of Canada.
The Asia-focused lender said the Royal Bank of Canada will acquire 100% of the issued common equity of HSBC Canada for a cash consideration of CAD13.50 billion, which is around USD10.10 billion.
HSBC said it estimated a pre-tax gain of USD5.70 billion for the sale.
The sale follows a strategic review of HSBC Canada, which HSBC said considered the branch's relatively low market share and the group's ability to invest in HSBC Canada's expansion and growth in other markets. HSBC said the best course of action was to sell the business.
The group continues to target an average tangible equity return of at least 12% from 2023, excluding the gain on this transaction.
HSBC's dividend approach for 2023 and 2024 remains a targeted payout ratio of 50%, excluding gains on disposal.
"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 Group Chief Executive Noel Quinn said.
HSBC shares were up 4.0% to 507.90 pence on Tuesday afternoon in London.
By Jaskeet Briah; [email protected]
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