October 1, 2014 / 9:40 PM / in 3 years

Canada's Royal Bank says will not spin off U.S. proprietary trading

TORONTO (Reuters) - Royal Bank of Canada RY.TO has decided not to divest its U.S. proprietary trading arm in its current form but will work to comply with new regulations there, the lender said on Wednesday.

Shareholders leave the Royal Bank of Canada's (RBC) Annual General Meeting in Calgary, Alberta February 28, 2013. REUTERS/Mike Sturk

Canada’s largest bank by market capitalization said it has been actively working to restructure the proprietary trading business - which uses the bank’s own funds - to comply with the “Volcker rule” ahead of a July 2015 deadline.

Introduced in the wake of the 2008 financial crisis, the “Volcker rule” prohibits banks from making speculative bets with their own money.

“While we are still evaluating various options, we have concluded that a spin-out of GAT (global arbitrage and trading) in its current form will not proceed,” the bank said in an e-mailed statement.

“We do not expect there to be a material impact on RBC’s revenue in any of the scenarios currently contemplated.”

Bloomberg had reported in May that the bank might invest as much as $1 billion in a hedge fund spun off from its proprietary trading business.

Reporting by Jeffrey Hodgson; Editing by Diane Craft

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