Market Overview

HSBC Bank Canada to Sell Retail Brokerage to National Bank For $206M


HSBC Bank Canada (NYSE: HBC) Tuesday said it plans to sell its retail business to National Bank of Canada (TSE:NA) to focus on expanding its commercial banking unit and invest in its global banking, retail and wealth management segments.

National Bank agreed to pay $206 million in cash to HSBC Bank Canada for the retail brokerage, which has $14.2 billion in assets under administration, managed by over 120 investment advisors in 27 offices across Canada.
The investment advisory business has roughly 70% of its operations centered in Ontario and British Columbia, a key factor in Montreal-based National Bank's decision to acquire it.

National Bank's president and CEO Louis Vachon said: "Through this acquisition, we are reaffirming our commitment to grow our wealth management distribution network across Canada.

"HSBC Securities Full Service Investment Advisory Business, with particular strength outside of Quebec, complements well our existing network.”

When combined with the recently completed acquisition of Wellington West, National Bank Financial will have approximately $80 billion in assets under administration across Canada and over 1,060 investment advisors. More than 50% of the bank's retail revenues will be generated outside of Quebec.

The transaction is expected to bolster National Bank's recurring 2012 and 2013 earnings per share by 3 to 5 cents, it said. The deal is anticipated to reduce its common equity Tier 1 ratio by 40 basis points.

As part of the agreement, HSBC will refer clients with retail brokerage needs to National Bank, while both companies will co-operate to serve the financial needs of mutual clients, HSBC said.

The deal also provides HSBC Securities access to National Bank's retail brokerage network for equity and debt public offerings, subject to certain terms and conditions.

Proceeds from the sale will be re-invested to grow the businesses of the HSBC Bank Canada, in line with the company's strategy announced in May.

The deal, which is subject to regulatory review and approval, is slated to close before year-end.

HSBC's stock rose 43 cents to $40.80, while shares of National Bank jumped 93 cents higher to $69.67 a share late Tuesday afternoon.

The preceding article is from one of our external contributors. It does not represent the opinion of Benzinga and has not been edited.

Posted-In: HSBC Bank Canada National Bank of CanadaTrading Ideas


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