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Royal Bank returns
RBTT no more
- Royal Bank of Canada buys out RBTT for $13.8 billion.
- The deal is to be completed by mid-2008.
- RBC will have its Caribbean headquarters in Port-of-Spain.
Twenty years after Royal Bank of Canada (RBC) ceased banking operations in T&T, it’s coming back.
RBC has announced an agreement to acquire RBTT for $13.8 billion.
RBTT Group chairman Peter July said RBTT shareholders would receive $40 per share (US$6.33) payable in 60 per cent cash and 40 per cent in RBC common shares.
“The combination of RBTT and RBC in the Caribbean represents a complementary and excellent fit and will prove to be mutually beneficial to both companies,” July said.
Officials of RBTT and RBC yesterday held a press conference at Hilton Trinidad to say that the RBTT Financial Group and RBC have agreed to combine RBC’s Caribbean retail banking operations with RBTT’s by acquiring RBTT for TT$13.8 billion (about US$2.2 billion).
The move, which is expected to be completed by mid-2008, will mean RBC will have its Caribbean headquarters in Port-of-Spain.
“So this transaction, therefore, sets the stage for T&T to truly become the financial centre of the Caribbean,” July said.
Peter Armenio, RBC’s head of US and international banking, said: “RBTT will provide RBC with immediate scale in major new markets that we are not today in, both Trinidad and Tobago and Jamaica and the Dutch Caribbean.”
Describing the agreement as “technically” an acquisition, July said shareholders would benefit by being able to “crystallise” the value of their RBTT investment and be able to own a portion of “one of the best performing financial services companies in the world.”
“This transaction, therefore, will significantly improve the liquidity of their investment,” he added.
The deal is subject to regulatory approvals and the approval of RBTT shareholders.
“The RBTT board of directors will recommend that vote in favour of this transaction and will convene a special meeting of shareholders for this purpose,” said July, who acknowledged that he and Group CEO Suresh Sookoo were products of RBC.
“In short, we are delighted that RBC have (sic) been attracted to and have taken note of the significant advances and progress that RBTT has made in the region over the years and that we have now reached an agreement on a transaction that brings us together again with significant potential benefits for all concerned.”
July said the $40 per share was based on valuations done by investment houses Credit Suisse and Merrill Lynch, and the figure represented the high end of the range.
“And further to that, it is a very fair price,” he said.
Group CEO Suresh Sookoo said the bank did not expect any major fallout of employees across jurisdictions.
After the press conference, Vincent Cabrera, president of the Banking Insurance and General Workers’ Union (BIGWU), said it did not view the transaction negatively.
“We don’t see the takeover or the merger, the acquisition, for the point in time, as a totally negative response,” he said.
Cabrera said now that the economy was doing well and the banking sector was more liberalised, the transaction would be to workers’ benefit, but they must have proper representation.
“We do not have a confrontational approach to the Royal Bank of Canada. We never had, but we have one in which we want to insist that international labour standards are, in fact, the benchmark of operations and the relationship between the new bank and the union,” Cabrera said.
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