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A Royal Bank of Canada (RBC) sign is seen in downtown Toronto.
A Royal Bank of Canada (RBC) sign is seen in downtown Toronto.
(MARK BLINCH/REUTERS)

RBC’s preferred-share experiment could open a $20-billion market

Canadian banks are likely to sell more than $20-billion worth of new shares, now that investors have showed they can stomach a new style of securities.

This week Royal Bank of Canada became the first domestic lender to test investor appetite for a special type of preferred share that converts into common equity during a catastrophic crisis. The deal, originally for $200-million, sold out quickly, and was ultimately up-sized to $500-million, prompting rating agency Moody’s Investor Service to estimate that more than $20-billion worth of these shares will eventually hit the market.