TORONTO – Some Royal Bank of Canada (NYSE: RY) employees who joined when the bank acquired HSBC Canada worry they could lose their jobs when RBC’s six-month guarantee to keep them expires this month, according to six sources familiar with the situation.
The Canadian lender agreed with the government to keep about 3,000 former corporate HSBC staff employed for six months as a condition of its C$13.4 billion acquisition of HSBC’s Canadian business, which closed at the end of March.
Royal Bank of Canada (NYSE: RY) told Reuters it found roles for nearly 80% of HSBC Canada’s former workforce of 4,500 people. That equates to roughly 3,600 workers, including corporate and retail staff.
Some former HSBC staff haven’t been given clear directions about their daily responsibilities at RBC and are becoming increasingly worried about layoffs, according to six employees interviewed by Reuters who declined to be identified, citing the uncertainty over their jobs.
RBC said it had created “dedicated resources” to help new joiners and had made efforts to slow hiring and hold open roles while waiting for the deal to be approved.
“We’ve also been transparent with employees, letting them know that those who are not in roles at the end of the six-month period will be provided with a severance package well beyond any legal requirement,” a spokesperson said in an emailed statement.
Royal Bank of Canada (NYSE: RY) shares have gained 24% year-to-date, making it the second biggest gainer among Canada’s big five banks.
‘WE HAVE LOTS OF JOBS’
Canadian Finance Minister Chrystia Freeland approved the deal in December on the condition that RBC also retain front-line HSBC banking and financial advisors for at least two years. One of the conditions also included providing voluntary departure packages for any HSBC employees seeking to leave.
“You should not worry,” RBC CEO Dave McKay told HSBC Canada staff in a December town hall. His comments have not been previously reported.
“There is so much opportunity and I didn’t want you to go into the holidays thinking, oh, what’s going to happen in the future,” McKay said. “We have jobs, we have lots of jobs.”
Royal Bank of Canada (NYSE: RY) employs more than 96,000 people globally.
When about 3,000 HSBC corporate employees arrived at their new workplace in April, four sources said they were unclear about their teams and duties, noting their roles overlapped with existing employees. Three of the four sources were also asked to apply for internal jobs that would put them in competition with RBC staff and external candidates.
Three sources said they were given more junior roles that were a step down after decades of experience.
All six sources were asked to explore opportunities within the bank. One source was able to find a role, and two others were asked to move to different divisions, they said. Meanwhile, four sources said they were left directionless, with no work to do after logging in to their systems.
To be sure, while many employees have found it challenging, others have had an easier transition.
A former HSBC leader now at Royal Bank of Canada (NYSE: RY) said several of their team members were able to find roles, while some senior staff took voluntary packages for personal reasons. The manager declined to be identified discussing personnel matters.
LACKING CLARITY
Still, two former HSBC managers said they lacked clarity on their teams’ futures despite discussions with RBC counterparts.
An August poll of a 1,000-member group of HSBC Canada alumni on LinkedIn showed 45% were still searching for internal jobs at Royal Bank of Canada (NYSE: RY), while 19% had applied for departure agreements and 32% had secured roles. A similar poll in July showed that 33% of respondents were seeking internal roles, 24% had left RBC and 19% had permanent roles.
Reuters could not verify the group’s members were RBC employees.
Toronto-based employment lawyer Lior Samfiru said his team had been consulted by former HSBC employees who were concerned about losing their jobs, and others who hadn’t yet received voluntary packages.
“It would have been very naive for anyone to think that there’s not going to be significant duplication and a significant loss of jobs over time because of this merger,” Samfiru said.
“There’s a real concern here about future employment,” particularly as job competition increases.
A large portion of RBC’s total targeted cost synergies of C$740 million would be seen between October 2024 and March 2025, a year after the acquisition, the bank said in a presentation to investors in August.
The savings would come from shared services, functions, and information technology in the first year, and distribution and product support in the second year.
Royal Bank of Canada (NYSE: RY) may take a restructuring charge next quarter as it cuts staff in its back office, said Nigel D’Souza, an analyst at Veritas Investment Research.
“If you can’t execute on cost synergies, that would be viewed very poorly … it may not look great to reduce headcount, but from a shareholder perspective they need to hit those cost synergy targets,” D’Souza said.
(Source: ReutersReuters)
