* Bank disbands international segment
* Caribbean unit added to Canadian bank division
* Royal seeks growth in low-risk custodian unit
By Cameron French
TORONTO, Sept 11 (Reuters) - Royal Bank of Canada said on Tuesday it would rearrange its business units in the hopes of boosting growth in its investor services segment and speeding the recovery of its underperforming Caribbean unit.
The bank, Canada's largest, will dissolve its international banking unit, following the sale of its U.S. retail bank, a deal that closed earlier this year. The shuffle will take effect Oct. 31.
RBC will combine its underperforming Caribbean bank with its flagship Canadian banking business as part of a new Personal and Commercial Banking unit, hoping a combined approach can help make both of them more efficient.
"In the Caribbean, really it's a chance to hopefully accelerate and look for more synergies, and help the Caribbean in turning the operations around," Dave McKay, head of the new unit, said at a financial services conference in New York.
Jim Westlake, group head of the international segment, will retire later this year after 17 years with the bank.
High loan losses at the Caribbean bank sent RBC's international division to a loss of C$31 million ($31.87 million) in the third quarter, down from a profit of C$18 million a year earlier.
The bank will also create a new business segment called Investor and Treasury services that will provide custodial services, a business RBC bulked up when it bought out its joint venture with Belgian lender Dexia last year.
Custodian banks cater to institutional investors, safeguarding their assets rather than dealing in traditional lending.
RBC Chief Executive Gord Nixon said the shift reflected a goal to build up the investor and custody business, "which is attractive because of its low risk profit and stable revenue streams."
National Bank financial analyst Peter Routledge said the new business alignment made sense, but he questioned what kind of growth the bank would be able to squeeze from its custodial service, which is several times smaller than leaders such as BNY Mellon and JP Morgan.
"It's a low-risk business, but it's also a low-growth business," he said.
RBC's shares were down 1.2 percent at C$55.75 on the Toronto Stock Exchange.