Exclusive: RBC Bankers Fear Layoffs as Commitment to Retain HSBC Staff Approaches Conclusion, Sources Reveal

By Nivedita Balu

TORONTO – Some employees of the Royal Bank of Canada (RBC) who were brought on board following the bank’s acquisition of HSBC Canada are expressing concerns about potential job losses as RBC’s six-month employment guarantee nears its end this month, according to sources familiar with the matter.

The Canadian financial institution committed to the government to retain around 3,000 former corporate HSBC employees for six months as part of its C$13.4 billion purchase of HSBC’s Canadian operations, which was finalized at the end of March.

RBC reported that it has managed to place nearly 80% of HSBC Canada’s former workforce of 4,500 employees into new roles, equating to approximately 3,600 staff, which includes both corporate and retail positions.

However, several former HSBC employees have noted a lack of clarity regarding their day-to-day responsibilities at RBC and are increasingly anxious about possible layoffs. Six employees interviewed have requested anonymity due to the uncertainty surrounding their employment situations.

In response, RBC stated it has established dedicated resources to assist new hires and has been cautious about hiring, leaving certain roles open while awaiting regulatory approval for the acquisition.

"We’ve been transparent with employees, informing them that those without positions at the end of the six-month period will receive a severance package significantly exceeding legal requirements," a spokesperson said in an email.

RBC shares have risen 24% year-to-date, making it the second-largest gainer among Canada’s major banks.

As a condition of the deal approved by Canadian Finance Minister Chrystia Freeland, RBC agreed to retain front-line banking and financial advisors from HSBC for a minimum of two years and to offer voluntary departure packages to any employees looking to leave.

"You should not worry," RBC CEO Dave McKay told HSBC Canada staff during a town hall meeting in December, a statement previously unreported. He reassured them by saying, "There is so much opportunity, and I didn’t want you to go into the holidays worrying about what might happen in the future. We have jobs, we have lots of jobs."

RBC employs over 96,000 people worldwide.

When roughly 3,000 corporate employees from HSBC joined RBC in April, multiple sources indicated they were unsure about their team structures and job responsibilities, with many finding their roles redundant compared to existing RBC positions. Some were even asked to compete for internal roles against current RBC staff and external candidates.

Additionally, some sources reported that they were reassigned to junior roles despite having extensive experience in their fields. While six employees were encouraged to look for new opportunities within the bank, many felt directionless with little to no assigned work upon logging into their systems.

Despite the challenges some have faced, others reported smoother transitions. A former HSBC manager noted that several team members successfully secured positions, while some senior staff opted for voluntary departure packages for personal reasons.

Nevertheless, two former HSBC managers indicated they still lacked clarity about their team’s futures, despite ongoing discussions with their RBC counterparts.

An August poll among a group of HSBC Canada alumni found that 45% were still searching for internal positions at RBC, 19% had applied for departure packages, and 32% had secured roles. A previous poll in July reported 33% were looking for internal roles, 24% had exited RBC, and 19% had landed permanent positions.

Employment lawyer Lior Samfiru mentioned that his firm has advised former HSBC employees concerned about job security and those yet to receive voluntary packages. "It would be naive to assume that there won’t be significant duplication and job losses over time because of this merger," he noted. "There’s a genuine concern about future employment, especially as competition for roles intensifies."

According to RBC, a substantial portion of its targeted C$740 million in cost synergies is anticipated between October 2024 and March 2025, a year after the acquisition. These savings will be derived from shared services, functions, and information technology in the first year, followed by distribution and product support in the subsequent year.

Analyst Nigel D’Souza suggested that RBC could face a restructuring charge in the forthcoming quarter as it reduces back-office staff. "If they fail to execute on cost synergies, it would reflect poorly… While cutting headcount may not appear favorable, shareholders will expect the bank to meet its cost synergy goals."