RBC is one step closer to completing their planned acquisition of HSBC Canada. On Friday evening news was released that Canada’s Competition Bureau has approved the takeover. That leaves one final hurdle in the process which is approval by Minister of the Finance.
Following a comprehensive review, the Bureau determined that the proposed merger is not likely to result in a substantial lessening or prevention of competition under the Competition Act.
While the Bureau’s review determined that competition in the Canadian banking market will not be greatly affected they did state the following:
Nonetheless, the Bureau found that it would result in a loss of rivalry between Canada’s largest and seventh largest banks. In addition, the Bureau found that:
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- relevant financial services markets remain concentrated, with Canada’s five largest banks accounting for the vast majority of services provided to Canadians;
- there are high barriers to entry and expansion in many of these markets; and
- conditions in certain markets may facilitate coordinated behaviour among firms.
Here they are saying that the majority of the market is held by the big five banks with high barriers to entry which would make one think the latter would be a good reason not to approve the acquisition as any chance of the market retaining the same or increased competition is highly unlikely.
What does this mean for HSBC Rewards Credit Cards?
For the Rewards Canada community the biggest question being asked is what will happen to HSBC Rewards Credit Cards if the acquisition receives approval from the Minister of Finance? If it does receive approval it appears the deal will close in the first quarter of 2024 and we can assume that HSBC Canada will be slowly absorbed into RBC. At that point we are not sure what will happen to HSBC credit cards. Will RBC keep them as separate products or will they move all those cardholders to existing RBC products and shut down the HSBC cards?
Of course we would all like RBC to keep HSBC’s products as is – however a card like the HSBC World Elite Mastercard is, in many aspects, a much better card than RBC’s flagship RBC Avion Visa Infinite Card. That alone may make RBC want to shut it down and transfer those HSBC cardholders to the Avion card as the latter would be more profitable product for the bank.
However, RBC could use a strong travel based Mastercard in their portfolio of cards outside of their WestJet cards. We could potentially see them create a RBC Avion World Elite Mastercard out of the HSBC World Elite Mastercard. The bank needs a card in their Avion portfolio that has lounge access and travel benefits not to mention strong insurance and they can do it with this card. You’ll notice I didn’t mention No FX Fees – ultimately I wouldn’t foresee RBC keeping that benefit as it is too big of a money maker for them on their current Avion cards and I’m sure they wouldn’t want to give that up by having current cardmembers move to a No FX Fee Mastercard.
This is all speculation on my part and only time will tell what will happen but if RBC does end up discontinuing the HSBC cards I wouldn’t expect this to happen until sometime late in 2024 or even perhaps into 2025. That still gives you at least a year if not more to enjoy all the benefits on the HSBC World Elite Mastercard should RBC nix it.