Royal Bank of Canada to pay $1.5 billion for BlueBay

Mon Oct 18, 2010 4:56pm EDT
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By Sudip Kar-Gupta and Cameron French

LONDON/TORONTO (Reuters) - Royal Bank of Canada (RY.TO: Quote) has agreed to buy British fund manager BlueBay Asset Management BBAY.L for 963 million pounds ($1.5 billion) in a push to cement its position as a leading global wealth manager.

Canada's biggest bank said on Monday it was offering 485 pence for each BlueBay share, representing a premium of 29 percent above its closing price of 375.70 pence on Friday.

Royal, along with Canada's other big banks, survived the global financial crisis relatively unscathed, and is now looking to expand its international operations at a time when many U.S. and European banks are still struggling to recover.

The bank has previously signaled it was eyeing wealth management opportunities in Europe, and rivals such as Bank of Nova Scotia (BNS.TO: Quote) and Bank of Montreal (BMO.TO: Quote) are also seeking growth in the sector.

"I would expect the Canadian banks to be acquisitive going forward in fund management," said Ben Phillips, a partner at management consultancy Casey Quirk.

The acquisition of BlueBay, which sells several of its own bond funds, will add about $40 billion to the C$200 billion ($197 billion) RBC's asset management division already manages.

The bank's total wealth management assets, which include assets across its capital markets and international divisions, total close to $400 billion.

"Our combination with BlueBay is a significant step in establishing leadership on a global basis in asset management," George Lewis, RBC's head of global wealth management, said during a conference call.   Continued...