RBC to buy full ownership of RBC Dexia

Tue Apr 3, 2012 12:14pm EDT
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By Euan Rocha

(Reuters) - Royal Bank of Canada (RY.TO: Quote) said on Tuesday it would buy the 50 percent stake in custody joint venture RBC Dexia that it does not already own from Banque Internationale à Luxembourg, or BIL, for 837.5 million euros ($1.1 billion).

Canada's No. 1 bank said the acquisition of RBC Dexia, which safeguards securities for institutional investors, would boost its earnings moderately in 2013. RBC Dexia also handles fund and pension-administration, along with other services for a client base that is spread across the globe.

The Toronto-based bank said it views RBC Dexia as a strong business that generates stable revenue in an attractive sector that is well positioned for long-term growth.

"This transaction is consistent with our overall strategy," RBC Chief Executive Gordon Nixon told a conference call. "It enhances our position as a leading provider of select financial services in targeted markets and provides additional global diversification."

"The business is highly complementary to our wealth management and our capital markets segments, with similar market dynamics and a premier institutional client base," he said.

The announcement came just as the European Union opened an investigation to determine whether the sale of BIL, the Luxembourg-based retail banking arm of bailed-out Franco-Belgian lender Dexia (DEXI.BR: Quote), was conducted properly.

Qatar's al-Thani royal family has agreed to buy 90 percent of BIL through their Precision Capital investment group, with the Luxembourg state taking the remaining 10 percent.

Last year, RBC said it was "examining its opportunities" involving its joint venture with Dexia after the European lender announced that it had started the process of disposing its stake in RBC Dexia.   Continued...