BMO - Bidders for HSBC Canada narrow after first round of bidding - report

At least two major Canadian banks have dropped out of the bidding for HSBC's ( NYSE: HSBC ) Canadian franchise, The Globe and Mail reported , citing people familiar with the process.

National Bank of Canada ( TSX: NA:CA ) ( OTCPK:NTIOF ) and Canadian Imperial Bank of Commerce ( NYSE: CM ) are no longer in the running for HSBC Canada ( HSBC ). Early in October, all six of Canada's largest banks held preliminary meetings as part of the process. First-round bids were due late last week, The Globe and Mail had reported.

CIBC ( CM ) is the country's fifth-largest bank and National Bank is the sixth largest. Some analysts considered the two banks to have the most compelling reasons for acquiring the HSBC unit and would have likely faced the least opposition in terms of antitrust matters.

For National Bank ( NA:CA ), a deal would have significantly bolstered its presence in Western Canada. For CIBC ( CM ), it would have boosted its commercial market share. Both, though, would have needed to raise capital.

Royal Bank of Canada ( NYSE: RY ), Canada's largest bank, is the only Canadian bank that may have enough capital on hand to acquire HSBC Canada, the article said, But that combination, which would give RBC ~24% market share, would likely raise significant opposition on anti-competitive grounds.

The other remaining contenders include Toronto-Dominion Bank ( NYSE: TD ), Bank of Nova Scotia ( NYSE: BNS ), and Bank of Montreal ( NYSE: BMO ). TD Bank, though, is already digesting two large acquisitions, First Horizon ( FHN ) and investment bank Cowen ( COWN ). Scotiabank, meanwhile, is in the midst of a CEO transition, with the change of leadership set to take place early next year .

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