Published On: Fri, Nov 21st, 2014

RBC pulls out of Caribbean markets

royal-bank-canada-740WILLEMSTAD - The Royal Bank of Canada (RBC) becomes the latest Canadian bank to cut its losses in the Caribbean, with confirmation that it will be shuttering its international wealth management business in the Caribbean region, as well as several international advisory businesses in North America.

The move follows RBC’s sale of its Jamaican operations earlier this year – on which it made a loss – and an announcement by The Bank of NovaScotia earlier this month of its plans to downsize around 120 branches in Mexico and the Caribbean, in preference for high-growth areas.

CIBC, which operates in the region as FirstCaribbean International Bank, also suffered a net-loss for the six months ending April 30, 2014, incurring a CDN $420 goodwill impairment charge, largely related to its under-performing operation in the Bahamas.

Speaking to media sources in Canada, Craig Fehr – an analyst with Edward Jones – said:

“What we’re seeing is the banks are doing a thorough evaluation of their business mix and figuring out what makes sense long term and what is probably best left in the hands of someone else.”

Sources indicate that the closure of RBC’s regional wealth management divisions – domiciled in The Bahamas, Barbados and the Cayman Islands – as well as management teams in Toronto, Montreal and the United States, could affect over 300 employees.

While heads of RBC’s regional wealth management divisions in the Caribbean declined specific comment on the exit and its impacts, RBC spokesman, Claire Holland, confirmed the closures to media sources, but declined specifics on the bank’s exit strategy:

“As there are a number of strategic options being considered as part of the exit, it would be premature as this stage to estimate the number of employees that will be impacted”, Holland said, while adding that the focus of the bank’s international growth strategy will now be on operating in major financial centres where RBC has “competitive strengths”.

RBC’s Caribbean wealth management divisions manage a portion of CDN$43.2billion in assets under the affected US and international wealth management operations.

According to the International Monetary Fund, RBC, CIBC and Bank of Nova Scotia hold around 60% of total banking assets in the Caribbean – a fact which the Fund says places the Caribbean at an increased risk of exposure to foreign financial crises.

For its part, RBC indicates that the closures will allow the bank to place increased focus on high net-worth and ultra-high net worth clients in key expansion markets, including Canada, the United States, the British Isles and Asia.

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