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Bad for Everyone But Bankers: REPORT

A growing coaltion of civil society actors released a new report in Ottawa today making the case against the RBC takeover of HSBC Canada.

Bad For Everyone But Bankers RBC Takeover HSBC Report
Download PDF • 2.98MB

RBC’s proposed takeover of HSBC Canada, Canada’s 7th largest bank, would be the biggest bank merger in Canadian history. Less competition in Canada’s already highly profitable and concentrated banking sector will lead to higher rates and fees for everyone from mortgage

holders to small business owners.

If approved by Finance Minister Chrystia Freeland, the takeover will increase the costs of mortgages, rents, and credit cards. It will give Canada’s dirtiest bank more money to fund climate chaos and undermine reconciliation. It will leave Canadians with fewer choices and put climate, Indigenous reconciliation, and affordability goals – three of the top priorities of the Liberal government – even further out of reach.

A step backwards on climate action

RBC’s critical role financing high-emitting companies and projects contributes to worsening the effects of climate change. RBC is the largest financier of fossil fuels in Canada and also in 2022 globally, having financed over C$340 B in fossil fuels since the Paris Climate Agreement was signed. The International Energy Agency has repeatedly stated the world can afford no more fossil fuel expansion if we are to limit planetary warming to 1.5 C.

In contrast, HSBC both in Canada and globally had stronger fossil fuel divestment policies and practices. These policies were removed from the Canadian arm of HSBC as a condition of this takeover. HSBC’s clean energy investments – while still insufficient to support the required energy transition – were nearly double those of RBC in 2022. If the takeover is approved without climate-related conditions, it will impede progress on Canada’s climate change targets, lead to fewer green options for Canadian banking consumers, and raise the already unacceptably high systemic level of climate risk in the Canadian financial system.

Further pressure on affordability

Canadians are facing an unprecedented housing affordability crisis, with record mortgage payments now making up much of the current inflationary pressures. At the centre of the housing affordability crisis lies Canada’s banking sector, who together comprise nearly 90% of the Canadian banking market. RBC controls almost 25% of the personal lending market, and is the largest player in the residential mortgage space. HSBC played a major role driving down rates, consistently beating the bigger banks by 35-75 basis points, saving mortgage holders tens of thousands over a term, savings that could also be passed onto

renters. The loss of HSBC as a competitor could easily translate into hundreds of millions of additional mortgage costs for Canadians.

Canada’s banking sector is highly concentrated and among the most profitable of any country. RBC has recorded record profits for most of the past 10 years, a time of increasing financial strain for Canadians. In 2019 RBC reported the highest profits ever recorded by a Canadian corporation, profits which have only increased since then. These high profits are increasingly driven by fees paid by Canadian consumers. While a stable banking sector has been a point of pride for Canadians in the past, it should be understood that the source of those high profits is the pocketbooks of Canadians increasingly struggling to make ends meet.

Harming efforts at Reconciliation

RBC, like all Canadian banks, has a long history of colonialist racist practices that disproportionately harm Indigenous Peoples. Even today, RBC’s business practices set back efforts at reconciliation. RBC is a lead financier of fossil fuel projects that violate Indigenous rights and cause violence to land defenders, including the highly controversial Coastal

GasLink and TransMountain pipelines. These destructive projects are the site of ongoing police brutality, surveillance, and criminalization of Indigenous Peoples, which have been repeatedly rebuked by the UN Committee on the Elimination of Racial Discrimination.

RBC is a leader in financing continued tar sands expansion, which devastates Indigenous communities in Northern Alberta. RBC also leads corporate financing for companies behind incredibly destructive mega-projects that will displace thousands and threaten the drinking

water of millions of Indigenous Peoples in the Global South.

RBC has no policy on the Free, Prior, and Informed Consent of Indigenous Peoples. A report by the Yellowhead Institute showed its internal practices consist largely of performative, symbolic gestures like training and partnerships, while its core business continues to focus on extractive resource development projects that disproportionately impact Indigenous peoples in negative ways.

At RBC’s 2023 annual shareholder meeting in Saskatoon RBC relegated Indigenous leaders

and those from frontline communities to a separate room away from the CEO, and militarized the meeting with police roadblocks, rooftop snipers, and heavy handed security.

How big is too big for Canada’s regulators?

RBC is already Canada’s biggest bank, and Canada’s largest corporation. Its continued financing of high emitting companies and polluters flies in the face of Canadian and global climate targets. In the context of extreme cost of living pressures and rising interest rates, the competition that HSBC provided was critical for delivering lower prices. Blessing

a bank with as poor a track record on reconciliation as RBC sends the wrong message to Indigenous peoples.

Only the Minister of Finance holds the power to block this takeover. In the midst of unprecedented and overlapping social and environmental crises, Minister Freeland should stand with the people and not the oligarchs of Bay Street, and block this takeover.

Download the full report using the link below:

Bad For Everyone But Bankers RBC Takeover HSBC Report
Download PDF • 2.98MB


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