TORONTO, Canada – Royal Bank of Canada (RBC) 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.
“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,” said Rob Johnston, Head, RBC Caribbean Banking. “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, Saint 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 Saint Lucia, shared, “We formed the consortium for the express purpose of expanding the scale of the locally-owned financial entities in the Eastern Caribbean Currency Union (ECCU). 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.”
Johannes added, “And speaking on behalf of the local banks, we embrace and eagerly anticipate that opportunity.”
“RBC has operated in the Caribbean for more than 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,” said Johnson. “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,” said Johnston.
The consortium was advised by PwC (JA), led by Wilfred Baghaloo, who added: “This transaction demonstrates that Caribbean countries and businesses have the capacity and capability to come together when the circumstances are right.”
Financial terms of the transaction were not disclosed. RBC will release its first-quarter 2020 results and host an earnings conference call on February 21, 2020.
First it was the Bank of Nova Scotia selling its Caribbean holdings; now its is RBC. Meanwhile, First Caribbean International Bank owned by the Canadian Imperial Bank of Commerce (CIBC) is losing money or just breaking even at many of their venues.
What’s really going on?
High labour costs partly rooted in high unionized employee numbers linked to an aversion of semi-literate customers to use ATMs, high loan default levels for both commercial and mortgage loans, and the absence of investment in mutual funds and other instruments (big money earners in the richer northern countries) have all conspired to make the continued presence of the Canadian banks uneconomical.