HSBC divi hopes after £8bn sale of Canada arm

HSBC has agreed to sell its business in Canada for £8.4bn amid pressure from a major investor to break up the global bank.

Shares climbed 4.2pc after it struck a deal to sell HSBC Canada to Royal Bank of Canada (RBC) – handing the buyer 130 branches and 780,000 customers.

The agreement came a little under two months after the bank said that it was considering a sale of the Canada arm, and sets the scene for HSBC to issue a bumper dividend to shareholders.

HSBC is under pressure from its largest investor, Chinese insurance group Ping An, to split its Asian and Western operations.

This has been resisted by HSBC chief executive Noel Quinn and chairman Mark Tucker though the bank recently also offloaded its loss-making consumer business in France.

‘HSBC Canada is a high performing and profitable bank, with strong leadership and exceptional people,’ said Quinn.

‘We decided to sell following a thorough review of the business, which assessed its relative market position within the Canadian market and its strategic fit within the HSBC portfolio, and concluded that there was a material value upside from selling.’

He said RBC will be able to take the business to ‘the next level’.

‘This transaction will free up additional capital to invest in growing our core businesses and to return to shareholders,’ Quinn said. Ping An’s near-8pc stake in HSBC makes it a strong voice.

The investor has used this to say the ‘world’s local bank’ would be better if it was a little more local.

The Asian business could prosper on its own away from the millstone of the global business, Ping An has argued, pointing to years of poor performance, high costs and languishing share price.