RBC Agrees To Sell Jamaica Bank, Securities Firm

Tom Burroughes

30 January 2014

has agreed to sell RBC Royal Bank (Jamaica) and RBTT Securities Jamaica to Sagicor Group Jamaica, the Toronto-headquartered banking group said yesterday.

The transaction is subject to the usual regulatory approvals and is expected to be finalised in the coming months, RBC said in a statement. Financial terms weren’t disclosed.

"Consistent with our strategy of being a competitive leader in the markets where we operate, we determined after a careful and thorough review that the best decision for the long-term future success of RBC Jamaica was to sell it to Sagicor," said Suresh Sookoo, CEO of RBC Caribbean.

"Sagicor is a well established financial franchise in Jamaica with the size, scale and complementary capabilities that RBC Jamaica does not currently possess," Sookoo said.

The deal comes at a time of continued M&A activity in the financial industry, including that of wealth management.

Caribbean presence

The Canadian firm said the agreement in no way meant it was withdrawing its involvement in the Caribbean marketplace.

"RBC has operated in the Caribbean for over 100 years and remains committed to this region. This transaction will allow us to successfully reposition our Caribbean business for the future and focus on regions where we have significant market share," said Dave McKay, group head, personal and commercial banking, RBC.

"We are focused on strengthening our business performance, service and competitiveness in markets where we can be a leading competitor over the long term,” he said.

RBC said the purchase price “approximately reflects the book value of RBC Jamaica.”

The bank said it expects the deal to produce a loss of C$60 million ($53.8 million) (before and after-tax) as a result of international accounting rules, largely related to an estimated write-down for the proportionate share of RBC Jamaica goodwill and other intangibles acquired by RBC in connection with its acquisition of RBTT Financial Group in 2008. The transaction is not expected to have a material impact on RBC's Basel III Common Equity Tier 1 ratio, it added.

The loss is based on current estimates and is subject to change and will be reflected in the results of the first quarter ending 31 January, 2014. RBC will release its first quarter 2014 results on 26 February.