MONTREAL (Reuters) - Royal Bank of Canada (RY.TO) is reviewing its records after being named in leaked documents that appeared to show a Panamanian law firm’s clients evaded taxes and laundered money, Chief Executive Officer Dave McKay said on Wednesday.
RBC, Canada’s biggest bank, is one of several financial institutions named in data that emerged following an investigation by the International Consortium of Investigative Journalists. The bank and its subsidiaries were associated with 378 shell companies registered in the Mossack Fonseca law firm’s data.
At the bank’s annual meeting, McKay faced several questions from shareholders who were unhappy about the impact they felt the allegations had on the bank’s reputation. One investor described the effect as “catastrophic”.
“I am equally unhappy RBC has been dragged into this,” McKay told reporters after the meeting.
McKay said RBC had not been accused of any illegality or wrongdoing and reiterated that it had controls in place to prevent illegal activity. He also said the bank had so far not been able yet to verify the data, which goes back decades.
“We don’t have access to this data, this data goes back 40 years, we don’t have understanding of this information and we have teams now going through our businesses trying to determine where the relationships may exist,” he told reporters.
In a separate matter, McKay confirmed RBC was not the unnamed Canadian bank fined C$1.1 million by the country’s financial intelligence agency on Wednesday for failing to report a suspicious transaction.
McKay also said he expected oil price gains since the beginning of the year to hold, addressing concerns about the effects of a longtime slump on the bank.
RBC is one of Canada’s biggest lenders to oil and gas companies and has a sizeable consumer loan book in the oil-producing province of Alberta, which has been hit by thousands of job losses.
However, McKay played down the bank’s exposure.
“Oil and gas represents about 1.6 percent of our total loan book, and our provision for credit loss remains in line with historic norms,” McKay said. “We also believe the significant gains that oil markets have made since January will hold, given that the U.S. economy continues to grow.”
RBC said in February that impaired loans to companies in the oil and gas sector had almost doubled from the previous quarter. That warning, along with increased provisions by other lenders, raised concerns that the impact on Canadian banks could worsen this year.
Editing by Matthew Lewis and Lisa Von Ahn