Speculated to be in the works for a few months, the Royal Bank of Canada announced today its plans to enter agreements with PNC Financial Services Group for the sale of its US regional retail banking operations. The sale will cost approximately $3.62 billion for the purchase of RBC Bank USA and its related credit card assets.
"RBC remains fully committed to the U.S. market and this transaction allows us to focus our U.S. efforts on continuing to grow our two largest U.S. businesses, RBC Wealth Management and RBC Capital Markets," said Gordon M. Nixon, president and chief executive officer of RBC, in a statement. "In addition, we will maintain our existing cross-border banking platform for current and future clients with a targeted suite of cross-border products and services to meet their needs."
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"We have built global capabilities and market-leading businesses in RBC Wealth Management and RBC Capital Markets and are committed to leveraging our strengths to invest in these and other high-return businesses," continued Mr. Nixon. "We continue to actively deploy our capital where we believe we can generate the highest returns."
The sale is estimated to be a $1.6 billion loss for RBC but is still seen by the company as a financial gain. Additionally, the RBC plans to continue providing operations to Canadian clients across the US and continue to focus on RBC Wealth Management and RBC Capital Markets in the US, which employs 8,000 in the US and 17,000 worldwide. The bank will also continue to offer its RBC Access USA products which include funds transfer between Canada and the US, foreign exchange rates and the no fee RBC Royal Bank US Dollar Visa Gold Card.