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Royal Bank selling Eastern Caribbean banking operations to consortium

TORONTO — Royal Bank of Canada has signed a deal to sell its banking operations in the Eastern Caribbean to a consortium of banks based in the region.

The agreement, RBC announced Thursday without financial terms, includes branches in Antigua, Dominica, Montserrat, St. Lucia, and St. Kitts and Nevis.

It also includes regional businesses operating under RBC Royal Bank Holdings (EC) Limited in Nevis, Grenada and St. Vincent and the Grenadines.

The acquiring consortium of five financial entities 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.

Royal Bank is one of several Canadian banks to announce planned sales or partial sales of business units operating in the Caribbean region.

Bank of Nova Scotia announced on Nov. 28 that it had reached an agreement to sell 100 per cent of its unit in the British Virgin Islands for an undisclosed amount to Republic Financial Holdings Ltd., which operates as Republic Bank. Prior to that, Republic also completed the purchase of Scotiabank's operations in Anguilla, Dominica, Grenada, St. Kitts & Nevis, St. Lucia, St. Maarten and St. Vincent and the Grenadines on Oct. 31. 

Scotiabank previously announced in June that it had a deal to sell its operations in Puerto Rico and the U.S. Virgin Islands to Oriental Bank, a subsidiary of OFG Bancorp, which said it would pay $550 million cash and a $10 million deposit premium. 

Canadian Imperial Bank of Commerce (CIBC) announced on Nov. 8 that it had a deal to sell a large portion of its investment in CIBC FirstCaribbean to GNB Financial Group Ltd. for US$797 million, while retaining a 24.9 per cent interest in the company — which operates in 16 countries in the region. 

CIBC also recognized a $135-million after-tax loss on the transaction in its fourth quarter ended Oct. 31. 

RBC didn't provide details about what it will receive from the purchasing consortium but said the transaction will be reflected in first quarter results for fiscal 2020, to be released on Feb. 21.

Rob Johnston, head of RBC Caribbean Banking, said the company was approached by the consortium with the proposal earlier this year.

"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," Johnston said in a statement.

This report by The Canadian Press was first published Dec. 12, 2019.

Companies in this story: (TSX:RY, TSX:CM, TSX:BNS)

 

 

The Canadian Press