Royal Bank of Canada CEO Dave McKay is Eager for HSBC Acquisition to Close
Royal Bank of Canada (RBC) chief executive Dave McKay says he is eager for his bank’s takeover of HSBC’s Canadian operations to close so they can begin an integration that he expects will lead to significant cost savings.
Cost Savings Estimated at $740 Million
The deal, which is expected to close in this quarter, is on track to save the company $740 million on costs, which works out to about 55 per cent of HSBC Canada’s overall cost base. McKay said this figure will firm up in coming weeks as the companies get locked in on the closing date.
Integration Process Expected to Begin Shortly
The bank CEO said the deal is a significant step forward for RBC and will help to create a more efficient and competitive Canadian banking sector. He noted that HSBC’s technology will be migrated onto RBC’s platforms on the day of the financial close, as opposed to most transactions where the ownership of the technology is taken on financial close and only migrated when ready.
Benefits of Integration
McKay said the integration of HSBC Canada into RBC will bring several benefits, including:
- Cost Savings: The deal is expected to save RBC $740 million in costs, which works out to about 55 per cent of HSBC Canada’s overall cost base.
- Increased Efficiency: The integration of HSBC Canada into RBC will help to create a more efficient and competitive Canadian banking sector.
- Enhanced Capabilities: HSBC’s capabilities on trade and finance, multi-currency accounts, and global view of overall banking structure are now going to be on the RBC tech stack and will be offered to all 15 million of RBC’s consumer, commercial, and corporate clients.
Bank of Montreal Also Sees Benefits from Acquisition
Bank of Montreal (BMO) chief executive Darryl White also spoke at the conference and said that BMO is expecting a ‘significant’ expense reduction from its acquisition of Bank of the West last year. He noted that BMO has upped its synergies target on the Bank of the West from US$670 million to US$800 million, an increase he described as ‘pretty much locked and loaded.’
Conclusion
The takeover of HSBC’s Canadian operations by RBC is a significant step forward for the bank and will help to create a more efficient and competitive Canadian banking sector. The integration of HSBC Canada into RBC is expected to bring several benefits, including cost savings, increased efficiency, and enhanced capabilities.
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