TORONTO- Royal Bank of Canada Wednesday said it had entered into a definitive agreement to sell RBC Royal Bank (Jamaica) Limited and RBTT Securities Jamaica Limited to Sagicor Group Jamaica Limited.
It said the transaction is subject to customary closing conditions, including regulatory approvals and is expected to be finalized in the coming months.
“Consistent with our strategy of being a competitive leader in the markets where we operate, we determined after a careful and thorough review that the best decision for the long-term future success of RBC Jamaica was to sell it to Sagicor,” said Suresh Sookoo, RBC chief executive officer for the Caribbean..
“Sagicor is a well established financial franchise in Jamaica with the size, scale and complementary capabilities that RBC Jamaica does not currently possess,” he added.
While financial terms of the transaction were not disclosed, the purchase price approximately reflects the book value of RBC Jamaica.
RBC said it expects the transaction to result in an estimated loss of CDN$60 million (One CDN dollar = US$0.89 cents) as a result of International Financial Reporting Standards, largely related to an estimated write down for the proportionate share of RBC Jamaica goodwill and other intangibles acquired by RBC in connection with its acquisition of RBTT Financial Group in 2008.
The transaction is not expected to have a material impact on RBC’s Basel III Common Equity Tier 1 ratio, it said, adding that the loss is based on current estimates and is subject to change and would be reflected in the results of the first quarter ending January 31, 2014.
RBC will release its first quarter 2014 results and host an earnings conference call on February 26.
RBC’s group head, Personal & Commercial Banking, Dave McKay, said the bank has operated in the Caribbean for over 100 years and remains committed to the region.
“This transaction will allow us to successfully reposition our Caribbean business for the future and focus on regions where we have significant market share.
“We are focused on strengthening our business performance, service and competitiveness in markets where we can be a leading competitor over the long term,” McKay added.