HSBC (LSE: HSBA) shares climbed 1.6% on Tuesday morning as the British lender unveiled plans for a special dividend after completing the sale of its Canadian business to Royal Bank of Canada (RBC).
The $0.21 per share special payout will accompany HSBC’s first quarter results at the end of April, supplementing any proposed interim dividend. The move follows an estimated $4.9 billion gain recorded in Q1 2024 from offloading HSBC Bank Canada to RBC last week for CAD13.5 billion ($10.16 billion).
The disposal gain encompasses $600 million in recycled foreign currency translation reserve losses, HSBC stated. The transaction is expected to boost HSBC’s CET1 ratio by around 0.7 percentage points, accounting for the sale proceeds, risk-weighted asset reduction, and special dividend outlay.
HSBC Chief Executive Noel Quinn hailed the deal’s completion as “another important milestone” in the bank’s transformation, providing capital to grow core operations and reward loyal shareholders. Conversely, RBC shares dipped 0.4% on Monday.
Neil McLaughlin, RBC’s group head of Personal & Commercial Banking, said the acquisition enhances their global capabilities, positioning RBC as the “bank of choice” for commercial clients with international needs, newcomers to Canada, and affluent clients requiring worldwide banking and wealth management services.
HSBC shares are are up a modest 13% over the past 12 months.
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