Jul 2008 Financial News

RBC/RBTT aims for top bank in Caribbean

Jul 18, 2008

Royal Bank of Canada, enlarged by its acquisition of Port-of-Spain-based RBTT, is gunning to become the biggest bank in the English-speaking Caribbean, well ahead of the full merger of their operations over the next two to three years, RBC's regional bosses say.

With a combined asset base of US$13.6 billion, Royal/RBTT ranks behind Canadian compatriot, Bank of Nova Scotia - assets of US$16.1 billion - as the largest bank in the Commonwealth Caribbean and fourth in the wider region, up from 11.

Scotiabank is number three in the wider region.

But Royal's group CEO-designate, Suresh Sookoo, who has been a swing through the Caribbean with other RBC executives, speaking to shareholders and customers on the worth of the deal, doesn't expect that these rankings will stand for very long.

In fact, there is hope that the roles will reverse over the next year or so, assuming that there are no great asset gains by Scotiabank and RBC/RBTT can grow its assets over two-and-half billion or nearly 20 per cent.

Beginning

RBC is paying US$2.2 billion, in cash and shares, for RBTT - a deal that is, in a sense, a return to the beginning. Indeed, RBTT started life as Royal Bank of Canada, Trinidad and Tobago subsidiary, which was spun-off in the 1980s when the Canadian bank was shedding its operations in a number of Caribbean markets, including Jamaica.

In Jamaica, the Royal Bank business was bought by the now defunct insurance company, Jamaica Mutual Life Assurance Company (Jamaica Mutual Life) and renamed Mutual Security Bank. When Jamaica Mutual later bought National Commercial Bank, Mutual Security was absorbed by NCB.

RBTT, on the other hand, spread out in the region, gaining a toe-hold in Jamaica when it bought a bank from the Government that was cobbled together from a number of distressed entities.

But even as the enlarged RBC, which will have 130 branches in 18 Caribbean markets, push hard to pump-up business, it will be 24 to 36 months before the integration of the Royal/RBTT operation is complete.

In fact, both institutions, officials say, will maintain separate shingles for at least another year-and-half, while they integrate technologies.

Expansion

Apparently, RBTT, because it was driven to invest in this area to facilitate its expansion in the English-speaking Caribbean, has the more advanced technology.

"RBC didn't have the scale and size to do that network build out," said RBC's Executive Vice-President R.S. Pennycook.

Upgraded technology across the markets, including Jamaica, is crucial to RBC's planned expansion.

"We will be building out more ATM machines across the island," said Sookoo.

"Of the 480 machines island-wide, RBTT has only 34."

He expects that the number of ATMs in Jamaica to at least double, in short order.

The new Royal Bank also expects to aggressively expand its loan portfolio and the quality of its service in order to expand the business.


Source:
Susan Gordon, Business Reporter
susan.gordon@gleanerjm.com
Jamaica Gleaner
Friday July 18, 2008

http://www.jamaica-gleaner.com/gleaner/20080718/business/business5.html