Royal Bank of Canada (RBC) has again been
linked with a possible sale of its US-based retail banking business
The US-based division of RBC comprises 426
branches, more than $25billion of assets and around 5,000
In January, Gordon Nixon, CEO of RBC told an investor
conference in Toronto that the “jury is out” on the future of RBC’s
retail unit in the US.
“At this point in the cycle, I am not sure
what we would like to do in [the US] in the longer term” said
Nixon has in the past said that all options
were on the table as regards its US division, concentrated in the
South-East of the US.
According to Canadian press reports, RBC has
now engaged JPMorgan Chase to explore a possible sale of
the US division. RBC may also consider the possibility of
partnering with a US-headquartered institution.
RBC’s international division reported a loss
of C$317m ($319.5m) in fiscal 2010, compared with a loss of
C$1.45bn in fiscal 2009.
Although the unit swung back into
the black in the three month period to 31 January – it posted a net
income of C$24m – the profit was derived from RBC’s business unit
in the Caribbean and its RBC Dexia unit.
An outright sale may fetch in the region of
C$2.5bn, little more than one-half of the almost C$5bn invested by
RBC in building up its US division.
US Bank, BB&T and PNC are among US lenders
linked with a possible bid; SunTrust Banks and Regions may also be
mooted as possible bidders but would both face capital raising
International raiders for whom the RBC
business unit might appeal include Spain-based BBVA – its US
operations are headquartered in Alabama – RBC’s Canadian-based
rivals Toronto Dominion and conceivably, Santander.