Sagicor, RBC confirm sale agreement
Published:Thursday | January 30, 2014 | 12:00 AM
Avia Collinder, Business Reporter
Sagicor Group Jamaica has confirmed it will be acquiring RBC Royal Bank (Jamaica) Limited and RBTT Securities Jamaica Limited from Royal Bank of Canada, subject to regulatory approval.
The price agreed is J$9.5 billion - the current book value for the Jamaican business.
Sagicor Group CEO Richard Byles said the transaction was being financed from internal sources.
The sale, when concluded, is expected to nearly quadruple the assets of subsidiary Sagicor Bank Jamaica Limited, from $21 billion to around $78 billion, and grow its small network of six branches to 19.
Sagicor Bank is currently the second smallest of seven in Jamaica's commercial banking arena, with three per cent of industry assets. The acquisition of the 13-branch retail network is expected to be finalised by April.
Regulatory approval is anticipated to take two months, with rebranding and staff integration to follow, Byles said.
Sagicor Group will acquire 120,000 clients and a loan book of 8,000 loans. A network of 42 ATMs islandwide is expected to improve customer service to banking clients.
According to Byles, the smaller bank will also access RBC's credit-card business, which will allow it to tap into a rich vein of earnings now being enjoyed by the larger banks.
UPPING THE ANTE ON PRODUCTS
The group also plans to up the ante on cross-selling, increasing product penetration from current banking clients from 1.8 products each to three. Sagicor Group provides insurance and investment services as well as banking.
Donovan Perkins, president and CEO of Sagicor Investments, said in relation to staffing, that some restructuring was expected, but the intention was to grow the banking operation over the long term.
Some branches might be closed in a consolidation process, a decision to be taken based on profitability.
Noting that Sagicor, while it awaited approval of the deal from both the Bank of Jamaica and the Financial Services Commission, was not now in control of staffing matters, Perkins said: "We will be respectfully engaging the union and other representatives to discuss what our plans are (when the acquisition is a done deal)."
Just over 500 workers are currently employed to RBC.
Suresh Sookoo, the CEO of RBC Caribbean, under which operations in Jamaica fall, said yesterday in a company release that the sale was a strategic move on the part of RBC Canada.
"Consistent with our strategy of being a competitive leader in the markets where we operate, we determined after a careful and thorough review that the best decision for the long-term future success of RBC Jamaica was to sell it to Sagicor," Sookoo said.
One of six Caribbean markets for the parent company, the Jamaican operation has accumulated losses of just $6.9 billion with increasing loan losses year over year. Total losses - inclusive of bad loans - Group CEO Byles disclosed yesterday, have been stripped from the company, and so the acquisition will be done with a balance sheet devoid of debt.
DELIVERING THE VISION
Byles said the move to acquire RBC's Jamaica operations "provides the opportunity to expand Sagicor's banking footprint, allowing us to serve our customers better … the acquisition of RBC Jamaica is a critical step in fulfilling our vision to build out a bank that is based on customer satisfaction and convenience, and we have confidence in RBC Jamaica's dedicated employees to help deliver this vision".
Sookoo stated: "Sagicor is a well-established financial franchise in Jamaica, with the size, scale and complementary capabilities that RBC Jamaica does not currently possess."
Sagicor Group Jamaica is a financial services conglomerate with businesses in Jamaica, The Cayman Islands and Costa Rica. The company is a member of the wider Sagicor Financial Corporation, which operates in more than 20 countries.