Wednesday, April 18, 2007

RBC in 'Royal Fidelity Merchant Bank & Trust Ltd' Joint Venture

The Globe and Mail, Tara Perkins, 18 April 2007

Royal Bank of Canada is forecasting growth in the Caribbean markets and is positioning itself to grab a piece of the action.

"The Caribbean capital markets are certainly small and it's relatively early in their development," Ross McDonald, RBC's head of Caribbean banking, said in an interview yesterday from Nassau. "We see the growth of the capital markets accelerating, and we really want to be a part of that."

Yesterday, Canada's biggest bank announced that it will buy a 50-per-cent stake in Fidelity Merchant Bank & Trust Ltd., the Bahamas-based merchant banking business of Fidelity Bank & Trust International Ltd.

"The merchant bank will provide a bunch of services that we don't currently have to offer, such as corporate advisory, investment management, transfer and registrar agents for corporates and governments," Mr. McDonald said. "It's the kind of capability that we are able to offer in Canada."

In one recent transaction involving a large Bahamian supermarket company, Fidelity provided the corporate advisory service and RBC partnered to provide some debt.

"There've been a number of mergers and acquisitions and large corporate financings in the Bahamas, Trinidad, Jamaica and Barbados," Mr. McDonald said. "Those are the four markets, I think, that we're targeting."

The movement within Caribbean markets toward economic integration means that "clients are going to be doing more cross-country business, and you've got to be offering the full range of services for those folks."

RBC already has about 1,350 employees and 42 branches in Antigua, the Bahamas, Barbados, Cayman Islands, Dominica, Montserrat, St. Kitts and St. Lucia.

The new joint venture with Fidelity will be called Royal Fidelity Merchant Bank & Trust Limited, and will provide corporate finance and advisory, investment management, stock brokerage, share registrar and transfer agency, pension and mutual fund administration services. Financial terms of the deal were not disclosed.

Royal Fidelity aims to be a one-stop shop for medium and large corporate finance transactions. Its president will be Michael Anderson, who is the current president of Fidelity Merchant.

Mr. McDonald, 54, was RBC's vice-president, personal and commercial banking, in Canada before being sent to Nassau six years ago.

"The Caribbean is not unlike Canada," Mr. McDonald said, citing small groups of the population separated by vast geographical distances. "And so, to have a critical mass in any kind of business is difficult in any one market, and it's hard to consolidate because none of the individual markets are big enough to get you the mass economies of scale. So, for people outside of the area looking in, it just doesn't have the attractiveness of some of the high-growth markets around the world."