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This has been a terrible week for Royal Bank of Canada on the public relations front, compelling CEO Gordon Nixon to make a full apology to Canadians Thursday for his bank's mishandling of the outsourcing story that broke last weekend. With Canadians threatening to pull their business – indeed, the head of one public service union called on members to do so – surely the hullabaloo must have weighed on the stock?
Not exactly. In fact, the complete opposite happened: Royal Bank stock is the best performer among the Big Five Canadian banks so far this week, up 2.8 per cent since last Friday's close. The next closest is Bank of Nova Scotia, up 1.8 per cent. In fact, Royal's stock barely budged Thursday on news of Mr. Nixon's public self-flagellation.
Why did investors shrug off the week's events? Perhaps because they knew every other bank has also outsourced workers. Perhaps because PR disasters in the banking world that aren't based on financial malfeasance, poor results, big writedowns or poor economic news hardly move the needle. And, most likely, because they knew that, as mad as customers might be, the prospect of moving one's mortgage, chequing and savings accounts, mutual funds, credit lines and so on just to pay pretty much the same fees and get pretty much the same service from any of the other big banks in our oligopolistic market would be too much of a bother for all but the most incensed Canadians.
The apology from Mr. Nixon, though overdue, is a gracious, contrite and appropriate response. It should be appreciated by customers, but as far as the whole incident is concerned, though investors evidently couldn't care less.
Sean Silcoff is a contributor to ROB Insight, the business commentary service available to Globe Unlimited subscribers. Click here for more of his Insights, and follow Sean on Twitter at @seansilcoff .