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Money

RBC: TOO BIG AND
TOO PROFITABLE

Losing HSBC will drive up the already devastatingly high cost of home mortgages and rents for millions of people. Less competition will lead to even higher consumer banking and credit card fees, and less choice for small businesses.

Canada has a big problem with corporate concentration, and we're the ones paying the price. The loss of HSBC as a competitive check on the power of Canada's biggest bank will lead to:

House For Sale Sign

Higher mortgage rates

HSBC is an aggressive competitor on mortgage products, currently beating RBC by 75 basis points or 3/4  of a %. This translates into over $30,000 less interest paid over five years by Vancouver and Toronto residents, savings that could be passed onto renters.

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Higher credit card fees

RBC recently raised its credit card interest rate from an already high 19.99% to 20.99%. Fewer credit card competitors means there will be no pressure to lower these high fees that millions of Canadians pay to service debt.

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More squeezing

RBC is already Canada's biggest corporation. In 2019 it posted the highest quarterly profits ever by a Canadian corporation, profits that have only increased since then. In 2023 RBC cut over 1,800 jobs while continuing to post record profits.

Setting back affordability and housing

The loss of HSBC as a competitive check on the power of Canada’s banking oligopoly will drive up the already devastatingly high cost of home mortgages and rents for millions of people.

RBC has posted record profits year after year. Meanwhile Canada is in the midst of a growing housing crisis, with Vancouver and the Greater Toronto Area as its epicenter, both with an average home price of roughly $1.1 million. HSBC is an aggressive competitor on mortgage products, currently beating RBC by 75 basis points. This translates into over $30,000 less interest paid over five years by Vancouver and Toronto residents, savings that might be passed onto renters.


Mortgage interest costs are already up 21% on average, even higher for those with variable-rates. When Canadians need it most, RBC would remove this source of aggressive competition by folding in HSBC’s products and rates.


Despite its smaller size, the removal of an aggressive competitor hurts not only HSBC customers but customers of all banks who lose a competitive option they can use as leverage for fairer prices at their own bank.


The CMHC says Canada needs 22M more units of housing by 2030 to make housing affordable for everyone in Canada. Less competition for developer financing will also increase the cost of loans for building new housing, driving up costs.

Affordability

Canadian banks are some of the most profitable on the planet, profits earned off the backs of individuals and small businesses. RBC raked in $16 billion in profits in 2022.


Canadians continue to struggle under the highest level of inflation in recent memory, with no relief in sight. It is widely understood that the current inflationary environment is being caused by growth in corporate profits.

 
Canadians pay significantly higher fees for banking and insurance than other countries. RBC recently raised its credit card interest rate from an already high 19.99% to 20.99%, in lock step with the other Big 6 banks. Fewer credit card competitors means there will be no pressure to lower these high fees that millions of Canadians pay to service debt.

Canadians know that with less competition the situation will only get worse, with recent polling showing 87% of Canadians agreeing that competition drives lower prices and more options for consumers.


Despite claims to keep branches open, takeovers are job killers not creators, and the jobs of the 4,200 HSBC employees not just in large urban centers but communities like Campbell River and Penticton are at risk.

 

Removing HSBC as a competitive force will lead to even higher consumer banking and credit card fees, fewer options for small businesses, and concentrate even more power into the hands of Canada's biggest corporation.

Stop the RBC Takeover of HSBC

Trudeau and Freeland must to say no to more corporate power, higher cost of living, and more climate chaos.

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