Royal Bank of Canada is selling its operations in the eastern Caribbean to a consortium of local banks, as Canada's largest lenders continue to pull back from a region that is increasingly seen as risky.
The deal will see RBC sell branches in Antigua and Barbuda, Dominica, Montserrat, St. Lucia, and St. Kitts and Nevis, as well as regional businesses in Nevis, Grenada and St. Vincent and the Grenadines.
The buyers are a consortium of banks that approached RBC, looking to increase their size and scale by adding the Canadian bank’s assets. They are Antigua Commercial Bank Ltd., 1st National Bank of St. Lucia, National Bank of Dominica Ltd., Bank of Montserrat and Bank of Nevis Ltd.
“We remain committed to the future of the Caribbean and to a vision of digital innovation,” Rob Johnston, head of RBC Caribbean Banking, said in a statement. “This transaction will allow us to realign and focus our strategy on Caribbean markets where we can achieve that vision most successfully.”
Financial terms were not disclosed, and the deal is subject to regulatory approvals and closing conditions.
RBC has been in the Caribbean for more than a century, and the bank will still have a presence in some core markets, such as Barbados, the Bahamas, and Trinidad and Tobago. But its decision to withdraw from several smaller Caribbean countries comes after similar moves by Bank of Nova Scotia and Canadian Imperial Bank of Commerce. Canada’s banks have become increasingly wary of risks inherent in Caribbean banking, from extreme weather such as hurricanes to concerns about money laundering.
Scotiabank sold its operations in seven Caribbean countries, including St. Lucia and St. Kitts and Nevis, to Republic Financial Holdings Ltd., the Trinidad and Tobago-based parent company of Republic Bank. The two banks later struck a separate deal by which Republic Financial will buy Scotiabank’s assets in the British Virgin Islands. But Scotiabank encountered local opposition from government officials and regulators that scuttled deals in Antigua and Guyana – a problem RBC may avoid by selling to local banks.
And CIBC reached a deal to sell a majority of its investment in its CIBC FirstCaribbean International Bank subsidiary for US$797-million to GNB Financial Group Ltd., which is controlled by Colombian billionaire Jaime Gilinski Bacal.
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James Bradshaw