Canada’s Conservative Party leader, Pierre Poilievre, is sounding the alarm over the Royal Bank of Canada’s (TSE:RY) (NYSE:RY) proposed acquisition of HSBC Canada for C$13.5 billion. Poilievre urges Finance Minister Chrystia Freeland to reject the deal in order to safeguard competition in the country’s mortgage market. Criticizing the dominance of major banking institutions, Poilievre told BNN Bloomberg Television, “It’s no competition when the market’s giant gobbles up the seventh-ranking player, leaving Canadians footing the bill.”
The deal, Royal Bank’s largest acquisition to date, entails taking over HSBC’s 128 Canadian branches and C$120 billion in assets. This venture promises to fortify Royal Bank’s grip on the national lending sector. While Canada’s Competition Bureau has endorsed the merger, consumer advocates warn of potential spikes in mortgage rates.
Many highlight HSBC Canada’s competitive rates as leverage for consumers in negotiating better deals. Environmental activists also criticize the deal, favoring HSBC’s greener stance on fossil fuels over Royal Bank’s policies. In response, Royal Bank emphasizes the move’s benefits, like retaining financial jobs in Canada and addressing HSBC’s exit uncertainties.
Is RY Overvalued?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on RY stock based on four Buys, four Holds, and one Sell assigned in the past three months, as indicated by the graphic below. Furthermore, the average RY price target of C$139.99 per share implies 26.1% upside potential.
