Home' Trinidad and Tobago Guardian : February 8th 2015 Contents SBG4 NEWS
SUNDAY BUSINESS GUARDIAN www.guardian.co.tt FEBRUARY 8 • 2015
RBC Financial (Caribbean)
Ltd has reported a huge
loss on its operations
across the region in its
2014 financial statement,
even as a Wall Street Jour-
nal report has hinted that
there may be significant
ownership changes in the wind at RBC s
wealth management division across the
Caribbean amidst claims of new problems
with money laundering within its Latin
America Wealth Management Division.
Those reports come against a backdrop of
a significant loss at RBC Financial
In its consolidated financial statement for
the 12-month period ending October 31,
2014, RBC Financial posted a loss of $735.7
million, which was a huge increase from
the $6.7 million loss in the previous year.
The company s 2014 performance was
driven by the fact that it recorded the sum
of $999.5 million as impairment losses on
loans and advances, which was more than
double the $491.5 million impairment losses
it reported in 2013.
In terms of the impairment losses by
sector, RBC Caribbean reported $479.2 mil-
lion in the commercial and corporate sector,
$405.5 million for mortgage loans and
$114.8 million for retail loans.
In the chief executive report, published
on January 31, RBC Financial CEO, Robert
Johnston, sought to put a brave face on the
results, pointing to the growth of the
regional banking franchise s core business:
Over the fiscal period ending October 31,
2014, excluding one-time items, we realised
core earnings of $511 million compared to
$448 million in 2013, as our core business
continues to improve and grow.
"We have positive momentum in quality
loan growth in our key areas of corporate
and business banking, which we will con-
tinue to develop further."
Johnston also stated:"Even as RBC Finan-
cial and its subsidiaries (the group) were
impacted by challenging economic condi-
tions across the region, we maintained our
relationship with the Caribbean and contin-
ue to reaffirm our commitment to the
Meanwhile, RBC s T&T subsidiary report-
ed a loss of $189.5 million for the 12-month
period ending October 31, 2014, which was
higher than the $55.7 million it recorded in
That loss was driven by the company
declaring $179.9 million in impairment loss-
es on loans and advances to customers. In
2013, RBC s T&T subsidiary reported $28.6
million in impairment losses.
In his managing director s report, Darryl
White stated: "Across the region, the
Caribbean parent implemented certain
restructuring initiatives to adjust the overall
cost structure of the group in response to
the challenging economic conditions across
the region. Costs relating to this restructur-
ing and the settlement of a long-outstand-
ing, post-retirement benefit issue, negative-
ly impacted the bank by $110 million
(2013-$268 million) in 2014.
"The bank also strengthened loan loss
provisions to reflect the challenges in col-
According to the WSJ article headlined
"Money-laundering fears fuel an RBC
retreat" financial losses may not be the
only issue facing the Canadian bank in the
On the issue of RBC s sale of some more
of its Caribbean businesses, the opened by
stating: "Canada s largest bank, Royal Bank
of Canada , is exiting from once-promising
businesses in Latin America and the
Caribbean after being swept up in the net
of global money-laundering probes."
Talking about the story during an inter-
view the same day it was published in the
WSJ (Tuesday February 4) on the Canadian
Business News Network, Mac Donald said
the probe into RBC s wealth management
business in Latin America stemmed back
into 2009, when Brazilian police investigat-
ed the possibility that laundered money
from the Dutch Caribbean may have ended
in an account in their country, touching off
probes Mac Donald said in two other RBC
Latin America areas, Uruguay an Argentina.
In a later story on WSJ, written on Fri-
day, February 6, Mac Donald said the RBC
was in talks "with several bidders for parts
of the Caribbean wealth-management busi-
ness that it is exiting as part of a pullback
in the Caribbean and Latin America".
Last November, after initial reports of
closures in several Latin American coun-
tries, a Business Guardian report quoted a
media release form the bank saying that
this was unlikely to affect T&T or the rest
of the region.
"We remain committed to strengthening
our overall business performance and
focused on markets where we can be a
leading competitor over the long term."
But Mac Donald has reported that two
people familiar with the matter have said
that "among the bidders for some of the
Caribbean assets is Toronto-based Cidel
Financial Group Inc." RBC is also said to be
advised in the process by Ernst & Young.
Mac Donald also said that "RBC is current-
ly in talks to sell its Caribbean-based trust
business, which helps the ultrawealthy plan
tax and ownership issues in inheritance"
but that this sale would not include a sale
of RBC s Caribbean brokerage business.
The WSJ report continues: "RBC is
pulling out of the Caribbean and Latin
America because the risks associated with
potential money-laundering didn t justify
the profits the bank was making there." It
adds a spokeswoman said "the business
had underperformed for several years and
said the bank had a strong record on regu-
latory compliance, including anti-money-
According to the CEO s report, RBC
Financial s result were affected by several
"one-time" items, including steeling long-
standing pension issues to the tune of $222
million and a $577 million dollar charge
related to the sale of the group s Jamaica
According to its financial statements, RBC
Financial s results were down when com-
pared to 2013 in its Interest Income,
($3,122,522 in 2014 to $3,498,572 in 2013)
and non interest income ($1,473,398 in
2014 to $1593,651 in 2013)
The Sunday BG contacted Natalie Man-
soor, Head Asset Management, RBC Invest-
ment Management (Caribbean) Limited for
a comment on the WSJ report sending her
links to the material.
She said that she was out of the country
but gave a commitment to review the story
and then provide a response.
Royal Bank of Canada announced in
October 2007 that it would acquire the
RBTT Financial Group for a total of about
US$2.2 billion, as it sought to re-enter the
region building on the Canadian bank s
modest presence in the region.
Shareholders of Trinidad and Tobago-
based RBTT received about US$6.33 per
share, payable in a combination of 60 per
cent cash and 40 per cent Royal Bank of
Canada common shares. The offer repre-
sented an 18 per cent premium to RBTT s
closing price on September 28, before the
Business Guardian pegged RBC as the
The transaction closed in June 2008 just
before the onset of the global financial cri-
sis, which has meant that the Canadian
parent has had challenges generating a
return on its US$2.2 billion investment.
In October 2007, Peter Armenio, RBC s
head of US and international banking said
on a conference call: "This franchise creates
a base for future expansion down the road"
not only in the Caribbean, but possibly in
Central America and South America, .
RBC said the deal, which is expected to
close by the middle of next year, will
"mildly" increase its earnings per share in
But the combination will be "transforma-
tional" for RBC in the Caribbean, as the
new entity will become the fourth largest
bank by assets in the region, Armenio said.
...looking to wrap up sale of wealth management unit
declares $735m loss
Darryl White, managing
director of RBC T&T.
PHOTO: SHIRLEY BAHADUR
Links Archive February 7th 2015 February 9th 2015 Navigation Previous Page Next Page