HSBC Canada Sale Approaching Final Stages

The field of contenders to acquire the Canadian arm of UK-based HSBC (0005) is narrowing, with at least two major Canadian banks now out of the running, according to reports.

HSBC confirmed earlier this month that it was considering selling the asset, a profitable business with strong roots in commercial banking and a strong presence in British Columbia and Ontario.

A successful buyer would greatly increase its presence in the Canadian banking market.

Some analysts saw National Bank and CIBC, Canada's fifth- and sixth-largest banks, as holding the upper hand in the auction's early stages because they have fewer competitive problems than their more dominant rivals. For National Bank, the acquisition would have helped it expand its presence in western Canada, analysts said.

Last week, however, CIBC said its priority was organic growth because it was important to maintain capital in an uncertain market.

Royal Bank of Canada, the country's largest bank, is considered the most prominent competitor because it has enough excess capital to buy HSBC Canada in cash without needing to raise additional capital.

The National Bank of Canada is no longer participating in the auction for HSBC Canada, and CIBC has withdrawn from the process, The Globe and Mail reported.

However, The Bank of Montreal is still among the banks pursuing HSBC Canada, according to sources.

HSBC Canada's arm is reportedly considered a prized asset that could fetch more than US$10 billion (HK$78 billion) if sold