Friday Nov 28, 2014

Breaking News: Royal Bank of Canada Selling US Retail Operations RBC Bank

11 May 2011

It may come at no surprise to some people, but Royal Bank of Canada (RBC) has put its U.S. operations up for sale, which is otherwise known as RBC Bank. I came across an article from the Wall Street Journal, which revealed the information of the sale.

The Royal Bank of Canada (RBC) is Canada’s largest bank (by assets) and has attracted several prospective bidders, despite the numerous problems its US retail operations have faced.

RBC Bank is expected to sell roughly for $3 billion.

With the sale of RBC Bank, it would show that RBC’s decade long attempt into the U.S. market was for virtually nothing. Some more bullishly would state they failed in the US. RBC’s retreat from the US could create some issues for it in the future. RBC’s competitors will clearly take advantage of the U.S. market, with low valuations in the wake of the financial crisis many banks have been getting picked off. Think about TD Bank Group recent Aqcuisition of Chrysler Finanical, BMO buying Marshall & Ilsley Corp, and that is just to name a few.

We have seen several Canadian lenders post solid earnings since the financial crisis, none of which have required any form of bailout. Comparing this to the U.S. banking operators who begged for bailout money.

About a month ago we received news that RBC was potentially selling of their U.S. retail banking operations, we contacted RBC for further information, however the only information we received then was:

RBC remains committed to its U.S. growth strategy

Clearly, with the news of the sale, their commitment is not there.

The response that we got from Royal Bank of Canada today was a simple:

No Comment.

Would selling off RBC Bank be a good move?

Realistically, at this point, their international banking section has reported losses, with $317 million loss in 2010 alone.

Selling the US retail operation would help them stop losing money and their earnings would improve, however leaving the U.S. market may not be the right move.

iStock 000011392293XSmall 300x199 Breaking News: Royal Bank of Canada Selling US Retail Operations RBC Bank

We are seeing many of the Canadian banks (mainly the big six) making their impact on the U.S market, further expanding their presence. If RBC was to leave at this point, it would hinder their progress in North America as a whole, and if they were to make an attempt in the future, they would either have to buy out several banks to gain a presence or just start from scratch. Either way, if they were to come back into the US market, it would be extremely difficult for them.

Personally, despite the losses, in the long run I feel it may be better to work through the current problems before selling, that way they can at least earn more on the sale or at potentially keep their U.S. operations. Allowing them to further expand their presence in the U.S.

What are your thoughts on Royal Bank of Canada selling the US operations? Do you think it is a good move or a bad move for RBC?

**RBC Bank Sale Confirmed**
**RBC Bank Sale FAQ**

About the Author

Bank Guru

My real name is Banking “Guru” Smith, yes my parents were bankers and believed that I one day would become a famous banker just like them. I enjoy a double-double coffee, super long lines at the grocery store and annoying CSR’s (Customer Service Representatives or more commonly known as ‘Tellers’). You will usually find me working behind the scenes, I let Sensei generate all the attention. I also forgot to mention that I invested in Madoff, think I will ever get my money back?
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Comments (31 )



Doug Wrote:

As I stated earlier, my picks for buying RBC Bank USA were TD Bank, PNC Financial or BB&T or Regions. Apparently, PNC and BB&T are doing some serious sniffing around and tire-kicking. And, RBC may consider a partial stock deal, allowing for a delayed exit from the U.S. market by maintaining a minority equity stake in the buyer – at least for awhile. :)

Cheers,
Doug

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Jeff Wrote:

I have accounts at RBC Bank in Orlando, and RBC Canada made a substantial effort in keeping these accounts separate from the local American accounts when opened. I have an unnerving feeling when RBC pulls out, they’re going to pull out the Canadian resident accounts as well. I opened an account at Chase, just “inChase” it happens! If the accounts stay in Florida after a sale and remain intact as they were intended to be; with a new owner, I will be happy to stay unless it is TD Bank, USA. TD has a horrible reputation down there, and lately their service up here is becoming quite diabolical as well. I’d personally like to see PNC as they have branches in Michigan, and in every state along I-75/95 corridors which would be very convenient for Canadians traveling back and forth.

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Rick Reply:

Jeff, I am in a very similiar situation. I have an account with RBC Bank USA that I opened independent of RBC Canada. I do not bank with RBC in Canada. I have been told that my account will be kept hostage (and not turned over to PNC). I very much want to be a PNC customer (their virtual vault account is incredible, and they are a true/real US bank). I have looked at the Financial Consumer Protection Bureau site in the US, and intend on filing a complaint about their hostage taking. I am not a cross-border client of theirs (TD & Scotia are my banks in Canada), but they are keeping me hostage because I live in Canada. I have never done any cross-boer function between any bank in Canada and RBC Bank USA. I mail in my deposits with Drafts purchased from TD. Any advice about how to prevent RBC from keeping me as their hostage?

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Sensei Reply:

Rick, from what I gather, you are interesting in switching over to PNC? To my knowledge, RBC will continue to offer their current RBC USA products, and despite the sale, the accounts and products will all function normally. That said, I wouldn’t see it being a problem to switch banks if you wanted to do that.

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Jeff Wrote:

It is a shame that ScotiaBank pulled out of the bidding for National City (now known as PNC). Scotia has a long history of foreign investment and I believe would have faired much better in the US than RBC has.

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Joshua Wrote:

My mother works for RBC here in the states. I hate to see them go but I guess they are sick of dealling with the shady, crooked banking/wall street business in the USA. If we didn’t have those damn bailouts maybe banks like rbc and others could have taken the place of banks like Bank of America, JP Morgan etc. Second, this tells me that RBC knows something about our Economy. To pull out of the USA is a BIG DEAL!!! That is (or was) a big investment to let go of. Maybe the biggest depression of our time is really coming? I think so… Just remember who forced these banks to leave. This sucks now I have to go with a sorry American bank.

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Sensei Wrote:

RBC could possibly be making the right move here; how I see it they are cutting their losses and taking from it what they can. The biggest downside to all of this is if they ever decide on tackling the U.S. market again they may have to start from scratch or spend a lot of buy out an existing bank.

Can’t wait to see who buys out RBC Bank USA, if it does happen to be a Canadian bank then they are only solidifying their presence in the U.S. as a major player in the market.

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MysteryBanker Wrote:

Honestly people this sounds like a rumour started by foreign analysts. Despite loses they’ve held strong in the South Eastern States and hold a higher index rating on stability then other banks out there. Also RBC Bank didn’t take any part of the bail out funds.

With the changes in the past few years and constant upgrades to their systems I highly doubt they’ll be pulling out anytime soon.

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Frans Wrote:

Too bad if this happens. Like many Canadians, I have an account with them and it makes banking in the USA really easy to pay our bills for our property down there.

Whatever is going to happen, I hope they can work it out and stay. If not I hope there will be a good American bank buying them and we Canadians can continue to bank through them. I’m not sure as a Canadian if it would be possible to get an account with the Bank of America or any other bank for that matter…

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Jeff Reply:

Yes you can Fran! You need to do it in person (open an account) and present a passport. Chase and Bank of America both will open accounts for Canadians. You will find most Florida banks will open accounts as well as border cities up North. RBC is doing what I feared, they negotiated to keep the 200,000 RBC Canadian Snowbird accounts, but at this point are promising to keep this bank open, (as an internet bank) with access to ATMs (such as Presto! thru Publix) with no branches to speak of. This is all subject to “regulatory” approval. Will the US Treasury allow an American Bank to exist for the benefit of Canadian citizens only? Maybe, but I somehow doubt it… hence the “Due to Regulatory Approval”. I have an account at Chase, and suffice to say, they are horrible to deal with. Bank of America I hear is better, but in Florida, personally, I’d rather deal with Regions or SunTrust. Good Luck!

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Marie Wrote:

As a former employee of RBCWM, this is not a surprise at all. They haven’t had an interest in RBC Bank in years – they were way too much work and didn’t bring in enough money for their liking. I am just glad to be out of that company completely – they are only about the bottom line and could care less about any of their employees or customers unless it makes them money.

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Jeff Reply:

Yes you can Marie. You need to do it in person (open an account) and present a passport. Chase and Bank of America both will open accounts for Canadians. You will find most Florida banks will open accounts as well as border cities up North. RBC is doing what I feared, they negotiated to keep the 200,000 RBC Canadian Snowbird accounts, but at this point are promising to keep this bank open, (as an internet bank) with access to ATMs (such as Presto! thru Publix) with no branches to speak of. This is all subject to “regulatory” approval. Will the US Treasury allow an American Bank to exist for the benefit of Canadian citizens only? Maybe, but I somehow doubt it… hence the “Due to Regulatory Approval”. I have an account at Chase, and suffice to say, they are horrible to deal with. Bank of America I hear is better, but in Florida, personally, I’d rather deal with Regions or SunTrust. Good Luck!

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Jeff Reply:

Oops meant for Fran, not Marie.

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Maurice Wrote:

Lots of Canadian snowbirds in Florida have accounts with rbc-us. For some it was convenient, ie easy transfers between rbc canadian accounts and rbc-usa. For others it was their only rbc account because it worked well for paying bills etc. in the US.

Whatever happenst better be as good as the present service! Otherwise there will be many Canadians closing this account.

By the way it looks like it will be bought out by PNC.

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Sensei Reply:

I cannot agree with you more. If the service isn’t the same, or better then Canadians will be looking to take their business elsewhere. I just heard about PNC winning the bid for RBC USA. We are in the process of looking into the situation so we can report to current Canadian RBC USA clients on who they will be banking with.

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Jeff Wrote:

From RBC Bank USA, Website. ( http://www.rbcbank.com/cid-275447.html )

RBC Maintains Cross-Border Banking Platform

Subject to regulatory approval, RBC will maintain U.S. banking capabilities to serve the needs of our Canadian clients across the U.S. and will continue to provide banking services to RBC Wealth Management and RBC Capital Markets in the U.S.

RBC will continue to offer RBC Access USA® products, including funds transfer between Canada and the U.S., the option of preferred foreign exchange rates and a no fee RBC Royal Bank US Dollar Visa Gold card. Cross-border banking clients will continue to have seamless access to funds and banking products such as mortgages, loans, automated teller machine (ATM) access, U.S. dollar accounts, debit and credit cards and integrated online banking.

In the coming months, we’ll provide more information regarding your accounts and any impacts to you as a result of the sale of RBC Bank to PNC. In the meantime, please continue to work with the same RBC Bank staff and locations you do today. You can expect the same level of engagement and support by the same friendly people you’ve come to know and trust. We will continue to support our Cross Border clients through our dedicated service number 1-800-769-2553.

We look forward to serving you and discussing any questions or concerns you may have.

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Jeff Reply:

Oops, meant for Fran not Marie.

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Dave Wrote:

If this is true about the sale of RBC, what happens to our account with them and our money

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Sensei Reply:

RBC plans on continuing to offer RBC Access USA products, which includes funds transfer between Canada and the U.S., the option of preferred foreign exchanged rates and a no fee RBC Royal Bank US Dollar Visa Gold card.

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John Wrote:

The article does not state how much RBC paid for the US bank, or how much RBC lost. Overall my guess is that the bank assets are a low growth area and that is why RBC is getting rid of them. Selling at or near the bottom of the market is never a ggod idea, I prefer BNS strategy of buying smaller banks in high growth emerging markets.

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Sensei Reply:

Sorry about that, I forgot to relink this article to an updated one, where it stated that information. It was explained that RBC Bank USA was sold for $3.45 billion.

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smayer97 Wrote:

just a note so I can receive follow-up comments. ;-)

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danwolf Wrote:

Interesting comment that Canadian banks did not receive bailouts… although you could’t be more wrong. After 2009 Canadian banks got over 50 billion in subsidies. In addition the CMHC stepped in to insure almost 100% of Canadian mortgages. The removal of government regulations have also contributed to allow Canadian banks to record record profits while the world economy teeters on the brink of collapse.

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bootland Wrote:

A great read, really anxious to find out what will come of this take over.

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Sam Spade Wrote:

Not surprised that RBC failed in the US …selling is an indication of inability to deal with the use customer base, and more of an indication of the rampant managerial incompetence, amplified by the WHO YOU KNOW to get you the job , not what you know and seeing IDIOTS getting promoted to managerial position while having NO sense of any education at all other than they know someone in the bank or they are the son or daughter of someone who knows somebody …and those who DESERVE based on their PROVEN academic and managerial experience as well as performance get pushed down.
you bit more than you could chew in the US market RBC.

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Ron Power Wrote:

RBC is one of the biggest Canadian banks, I do not know why this failed, but maybe there are better opportunities elsewhere.

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john Wrote:

Maybe the US operation is not gaining much from its customers, bad move for those who are employed on that institution… john Foreclosure

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Although information you posted on this portal is of different nature regarding banking sector

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john Wrote:

I agree with ron power, this is one of the biggest, and now it failed… tsk3… hope they build a better one..

john

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