National Bank of Canada, through an affiliate, has agreed to buy the full service investment business of HSBC Securities (Canada) for $206 million in cash, creating an expanded business with around $80 billion of assets under administration.

The purchase agreement will also include certain assets related to the segregated fund and insurance business of HSBC Insurance Agency (Canada), a statement from the firms said yesterday. HSBC Securities' Full Service Investment Advisory Business has $14.2 billion of assets under administration, managed by over 120 investment advisors located in 27 offices across Canada.

In addition to the cash sum to be paid, an additional amount has been set aside to ensure maximum retention of investment advisors, the statement said.

(The original press statement did not make it clear whether the prices quoted were in Canadian or US dollars; the banks could not be contacted at the time of going to press).

The deal is expected to increase National Bank's 2012 and 2013 recurring earnings per share by $0.03 to $0.05. National Bank estimates the transaction will reduce its Common Equity Tier 1 ratio under Basel III rules by around 0.4 per cent and the deal is expected to close in December, subject to necessary regulatory approval.

“The transaction is another major step in implementing National Bank's strategy to expand across Canada and add scale to its wealth management platform. When combined with the recently completed acquisition of Wellington West, National Bank Financial will have approximately $80 billion in assets under administration across Canada and over 1,060 investment advisors,” National Bank said.

"Through this acquisition, we are reaffirming our commitment to grow our wealth management distribution network across Canada. HSBC Securities' Full Service Investment Advisory Business, with particular strength outside of Quebec, complements well our existing network," said National Bank president and chief executive, Louis Vachon.

As part of the transaction, HSBC Bank Canada will refer clients with non-discretionary full-service investment advisory needs to National Bank, and HSBC Bank Canada and National Bank will cooperate to serve the financial needs of mutual clients, the statement said.