Royal Bank of Canada (RY on TSX and NYSE), on Thursday, announced it has entered into definitive agreements to sell all banking operations in the Eastern Caribbean to a consortium of indigenous banks within the region.
The transaction is subject to regulatory approval and other customary closing conditions, and is expected to be finalized in the coming months.
Financial terms of the transaction were not disclosed.
“Consistent with our strategy of being a competitive leader in the markets where we operate, RBC is always evaluating opportunities for our business. Earlier this year, we were approached by a consortium of indigenous banks with their proposal to acquire all RBC Eastern Caribbean operations,” Rob Johnston, head, RBC Caribbean Banking said.
“After a review of our operations and strategy, we determined this opportunity was a good decision for the long-term future success of RBC Caribbean, and also, that it aligned with our vision to help our clients thrive and communities prosper,” he said.
The sale encompasses the branches of Royal Bank of Canada in Antigua, Dominica, Montserrat, St. Lucia, and St. Kitts and Nevis, as well as regional businesses operating under RBC Royal Bank Holdings (EC) Limited in Nevis, Grenada and St. Vincent and the Grenadines.
Collectively, these operations are referred to as “RBC Eastern Caribbean”.
The consortium of five financial entities purchasing includes: 1st National Bank of St. Lucia, Antigua Commercial Bank Ltd., National Bank of Dominica Ltd., the Bank of Montserrat and Bank of Nevis Ltd.
Johnathan Johannes, Managing Director, 1st National Bank of St. Lucia, said, “We formed the consortium for the express purpose of expanding the scale of the locally owned financial entities in the Eastern Caribbean Currency Union. This transaction gives us the size and scale to play a more active role in the development of our respective countries. We see this transaction as the first step in achieving even greater synergies, efficiencies and cross-territory marketing opportunities….
“RBC has operated in the Caribbean for more 100 years — longer than we have been in many parts of Canada. We remain committed to the future of the Caribbean and to a vision of digital innovation that transcends traditional services,” Johnson said.
“This transaction will allow us to realign and focus our strategy on Caribbean markets where we can achieve that vision most successfully…
“Self-determination is the highest level of empowerment — and the indigenous banks acquiring this business will now have an increased opportunity to influence the development of their communities,” Johnston said.
Johannes added: “And speaking on behalf of the local banks, we embrace and eagerly anticipate that opportunity.”
The consortium was advised by PwC (JA), led by Wilfred Baghaloo, who said: “This transaction demonstrates that Caribbean countries and businesses have the capacity and capability to come together when the circumstances are right.”
RBC will release its first quarter 2020 results and host an earnings conference call on Feb. 21, 2020.
What this really shows is that if RBTT is crashing out of the Caribbean so close on the heals of Scotia, the Caribbean is about to suffer a sever financial tragedy. They are after all in the banking business and to get out of the Caribbean is the reverse of what one would expect.
correction should read RBC not RBTT, my apologies.
I have lot of confident in RBC’s leadership strategies and recognized proactive approaches in evaluating business opportunities. I have no doubt that the final move will depend on its first quarter 2020 results.
However, there should be concerns as to the timing after operating in the Caribbean region for more 100 years.
I happen to have retired as a sr. business analysis with RBC Canada and am comfortable due to familiarity of RBC’s continued precedence to the stability of its shareholders.
Yes, ‘to remain committed to the future of the Caribbean’ would be wise for RBC or any leading financial institution with a vision to transcend globally. After all; the Caribbean market has lots of potential; all depends on linked regulations and the unification between CARICOM leaders along with future market strategies.
Maybe I missed something here Elma. Since you worked for this bank as an analyst, maybe you can set me straight: In the article it sounds like this bank is “pulling-out” of our region of the Caribbean. In your comment it sounds like the potential is so great they would be wisely compelled to expand. Since you were an analyst, what is going on? As Jolly Green mentions, it is on the heals of Scotiabank pulling out. Is there something we should know?
RBCs obligations are always in the best interest of its shareholders, the said reason that the final decision depends on its first quarter 2020 results. No leading financial institution strategies play blind-eye and deft-ear to the political happenings within regions.
The Caribbean leaders are fully aware that in the absence of well-established bylaws by a united CARICOM; to attract investors will be almost impossible due to the traditional lending reservations of the financial institutions risk management stratagems.
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