RBC weighs return to ‘attractive’ Cuba market as U.S. relations warm

Royal Bank of Canada chief executive David McKay said U.S. moves to normalize relations with Cuba present an opportunity for the lender to return to the Caribbean nation.

"We see a very attractive, long-term marketplace in Cuba," Mr. McKay, 51, said today in an interview at the bank's Toronto headquarters.

U.S. President Barack Obama and Cuban President Raul Castro said yesterday they'd begin normalizing relations between the two nations, a deal brokered by Pope Francis and aided by the generational shift in Florida's Cuban-American community. The action would involve lifting some of the restrictions that have limited travel and commerce for more than five decades.

"We've been anticipating this for quite some time," Mr. McKay said. "It's not a surprise, and it's played into some of our recent strategic moves.

RBC, Canada's second-largest lender by assets, first opened an office in Cuba in 1899. The lender shut its retail banking operations on the island in 1960 and five years later closed its representative office there, according to the company website. While the bank no longer operates in Cuba, Mr. McKay said there's still a building in Havana bearing the Royal Bank of Canada name.

Cuba is the third-most visited country for Canadians after the United States and Mexico. About 1.1 million Canadians travelled to the island in 2012, staying an average of eight nights and spending a total of $748-million (Canadian), according to Statistics Canada .

RBC, which has operations in about 18 Caribbean nations, spent about 18 months reorganizing its Caribbean retail banking business by cutting jobs, streamlining head-office operations, combining branches and selling its Jamaica unit for a loss in June. A stronger U.S. dollar, lower oil prices and improved U.S. economy may help revive tourism in the Caribbean, and thawing U.S.-Cuba relations may play a key role in the region's future.

"Part of our thought process around exiting Jamaica was not only did we not have scale and market presence and the capability to compete in the market, but we saw Cuba presenting a long-term competition for the U.S. tourist dollar to Jamaica," Mr. McKay said.