BRIDGETOWN, Barbados, November 21, 2014 (AMG) — The Royal Bank of Canada (RBC) is now the latest Canadian bank to cut its losses in the Caribbean, following a decision to close its Caribbean wealth management divisions and several international advisory businesses in North America.
The move follows RBC’s sale of its Jamaican operations earlier this year, and an announcement by The Bank of Nova Scotia earlier this month of its plans to close around 120 branches in Mexico and the Caribbean.
Canadian bank CIBC also suffered a net-loss on its FirstCaribbean bank operations in April 2014, for which it incurred a CDN $420 million goodwill impairment charge primarily related to its under-performing operation in the Bahamas.
Speaking to media sources in Canada following the RBC developments, 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 declined specific comment on the exit and its impacts, RBC spokesman Claire Holland has confirmed the closures, while declining to offer 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 at this stage to estimate the number of employees that will be impacted”, she 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 over CDN$43.2 billion in assets under the affected US and international wealth management operations.
When contacted for comment, Director of the Barbados International Business Association (BIBA), Henderson Holmes, said that his organisation was still trying to ascertain the facts before making a full statement on the RBC exit.
Holmes however cautioned that an exit “would not be good for Barbados”, while stating that BIBA’s current considerations were in whether a purchaser has been identified for the Barbados business, and whether its assets would remain in the country.
According to the International Monetary Fund, RBC, CIBC and the Bank of Nova Scotia hold around 60% of total banking assets in the Caribbean – a fact which the Fund says places the region 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.