Topic: How To Invest

The Successful Investor Hotline – Friday, September 15, 2023

Article Excerpt

ROYAL BANK OF CANADA, $124.12, Toronto symbol RY, is still a buy. In November 2022, the bank agreed to pay $13.5 billion in cash for the Canadian operations of U.K.-based HSBC Holdings plc (New York symbol HSBC). To put that cost in context, Royal’s market cap (the total value of all outstanding shares) is $172.3 billion. HSBC operates 130 branches that mainly cater to businesses in industries that trade and bank internationally. It also provides banking and wealth management services to over 770,000 retail clients. In all, it has total assets of $134 billion. Canada’s Competition Bureau recently approved the acquisition. The deal still needs other approvals, but Royal expects to complete the transaction in early 2024. The purchase will cut Royal’s capitalization ratio (CET1, or Common Equity Tier 1, a key measure of its ability to absorb bad loans) from 14.1% as of July 31, 2023, to around 11.7%. However, that is still well above the regulatory minimum of 11.0%. The bank could sell…