Wednesday, October 03, 2007


BMO Capital Markets, 3 October 2007

As expected, on October 2 Royal Bank announced an agreement to acquire 100% of Royal Bank of Trinidad and Tobago (RBTT), in a deal worth US$2.2 billion. We had speculated on a deal in a research comment released in the morning of October 2 and don't intend to repeat that comment verbatim. Everything was largely as advertised: TT$40 per RBTT share (or US$6.33) comprised of TT$24 and stock of RBC (RY share piece is collared). The one variation from our expectations was that we had expected the 46 RBC branches to be rolled in first. Instead, this will be done after the deal closes. The transaction is expected to close by mid-2008 and will be marginally accretive to earnings in 2008.

All in all, we continue to extol the virtues of banking in the Caribbean. This deal will anchor Royal's operations in the region and will be marginally accretive. We believe that the merged entity would become a more powerful player in the region, with a deep pocketed parent and a more diversified banking footprint. For further details on Caribbean banking and a backgrounder on RBTT, please see our research comment, 'Caribbean Opportunity: After One Time Is a Next Time,' dated October 2.

We maintain our Outperform rating on Royal Bank shares. As opposed to Centura and the bank's ongoing attempt to develop critical mass in the U.S., this deal would, in a single transaction, make RBC a meaningful competitor in the region.
Scotia Capital, 3 October 2007

Royal Bank of Canada to Acquire RBTT Financial Group for US$2.2 billion

• Royal Bank announced an agreement to acquire RBTT Financial Group based in Port of Spain, Trinidad and Tobago for approximately US$2.2 billion or US$6.33 per share. Consideration consists of 60% cash and 40% RBC common shares. The transaction is expected to close mid 2008 and be accretive by the end of fiscal 2008.

Acquisition Price

• The acquisition price is an 18% premium on RBTT's closing price on September 28, 2007 and a 27% premium on RBTT's average share price over the last 12 months.

• The price of the transaction, according to RBC, represents 14.2x LTM earnings, price to book value of 3.05x, price to tangible book value of 3.39x and a deposit premium of 34%.

• Under the agreement the collar mechanism is used. RBTT's shareholders will receive a fixed amount of cash and a number of RBC common shares for their RBTT shares which will be determined by an exchange ratio.

• The number of RBC shares received by RBTT shareholders is subject to a 10% plus/minus collar based on a RBC share price of US$54.42 per share (the average trading price for the five days ending Sept. 28). RBC would issue 16.2 million common shares based on RBC US$54.42 share price, increasing shares outstanding by a very modest 1.3%.


• RBTT is a Caribbean-owned banking and financial services group that offers a complete range of banking and financial services to customers in Trinidad and Tobago and the Caribbean.

• RBTT product strengths are in retail/commercial banking, investment banking and asset management.

• RBTT has US$7.5 billion in assets, US$4.5 billion in deposits and US$3.7 billion in loans. RBTT is the second largest bank in Trinidad and Tobago and the third largest bank in Jamaica.

• RBTT branch network has a total of 84 branches, including 25 branches in Trinidad and Tobago (2nd largest, 27 % market share), 21 branches in Jamaica (3rd largest, 14.4% market share), 15 branches in Dutch Caribbean, 11 branches in Eastern Caribbean, 5 branches in Suriname, 4 branches in Barbados, and 3 branches scheduled to open.

RBC/RBTT Acquisition - Scale & Complementary Fit

• The transaction expands RBC's Caribbean presence to the 4th largest bank (previously 11th) with pro forma assets for RBC/RBTT of US$13.6 billion. Scotiabank is the third largest bank with assets of US$16.1 billion and CIBC FirstCaribbean is the fifth largest bank with assets of US$12.3 billion.

• The acquisition increases RBC's Caribbean branch network from 46 branches to 130 branches across 18 countries and territories in the region. The combination broadens the product offering and diversifies the operations across the Caribbean.

• The RBC/RBTT acquisition is expected to have very little cost synergies as there is no overlap in branch networks but will potentially have positive revenue synergies from improved scale and diversified product offering. The transaction will allow the bank to leverage its local market expertise, state of the art retail banking technology platform, diverse products, and geographic reach.

• Headquarters of the combined Caribbean operations are to be established in Port of Spain over a timetable to be determined following the close of the transaction.

• RBTT Financial Group CEO Suresh Sookoo will be appointed CEO of RBC's Caribbean retail banking operations following integration of the businesses.

• RBC will explore the possibility of issuing depository receipts backed by common shares on the Trinidad and Tobago Stock Exchange.


• RBC's acquisition of RBTT is the second international acquisition in the past month and the ninth acquisition outside of Canada in the past 12 months. RBC remains committed to growing its business platform outside of Canada.

• Maintain 1-Sector Outperform based on absence of premium multiple, superior profitability and strong retail and wealth management operation platform with wholesale only representing 27% of earnings in Q3/07, the second lowest of the bank group.
Bloomberg, Sean B. Pasternak, 3 October 2007

Canada's banks will make more foreign acquisitions to take advantage of the stronger Canadian dollar, analysts and investors said, after the industry spent $10.5 billion yesterday in its biggest-ever shopping spree abroad.

Toronto-Dominion Bank agreed to buy New Jersey's Commerce Bancorp Inc. for $8.3 billion, making it the seventh-largest North American bank by branches. Royal Bank of Canada, the country's biggest bank, will pay $2.2 billion for RBTT Financial Holdings of Trinidad and Tobago, doubling its Caribbean network.

Canada's five largest banks, including Bank of Nova Scotia, Bank of Montreal and Canadian Imperial Bank of Commerce, have been looking to expand abroad because they're blocked by the federal government from merging. With the Canadian dollar at a 31-year high, foreign takeovers are a bargain.

``The dollar recognizes that the country's in a strong position; the financial sector's in a strong position; our customers in Canada are in a strong position,'' Bank of Nova Scotia Chief Executive Officer Richard Waugh told reporters in Toronto today. ``All that comes together, and that gives all of us some great opportunities that you're starting to see.''

Canada's second-biggest bank passed on RBTT because ``it didn't fit for us,'' Waugh said. Scotiabank is already the largest Caribbean bank, he said, with more than 200 branches.

Canada's currency reached equal value with the U.S. dollar for the first time in three decades on Sept. 20. It touched $1.0091 on Oct. 1, the highest since November 1976. Today it traded at $1.0034 at 12:16 p.m. in Toronto.

``Canadian banks are using the dollar at parity to buy assets cheaply,'' said Andrew Martyn, who helps manage the equivalent of about $475 million at Toronto-based Davis-Rea Ltd. ``They're going to continue going south for acquisitions, as there's almost nothing left in Canada.''

In addition, Canadian banks haven't been hurt as much as U.S. banks by rising defaults of subprime loans because they offer fewer high-risk mortgages, analysts said.

``U.S. banks are probably facing another four to eight quarters of pain,'' said Paul Hand, managing director, equity trading at RBC Capital Markets. ``Their willingness to enter into deals has increased.''

Canada's financial companies have disclosed $15.7 billion of acquisitions of foreign-owned financial companies this year, more than double the $7.6 billion reported in all of last year, data compiled by Bloomberg show.

John Aiken, an analyst at Dundee Securities Corp., wrote yesterday in a note to investors that he ``would not be surprised to see other Canadian financial institutions make large acquisitions in the near term.''

``With the dollar being the way that it is, there's no question that Canadian banks can take advantage of this,'' said Jacob Jegher, an analyst at Boston-based research firm Celent. ``There's still some banks there that haven't made a move yet, and they're going to be feeling the competitive pressures.''

Jegher said Bank of Montreal, which has operations in the Chicago area through its Harris Bank unit, is one of the more likely acquirers. Harris Bank was one of several companies approached by Minnesota-based TCF Financial Corp. to make a takeover bid, Crain's Chicago Business reported last month.

Ralph Marranca, a spokesman at the Toronto-based bank, said the bank always looks at potential acquisitions. He declined to be more specific.

Canadian banks have been banned from merging since 1998, when the Finance Minister, Paul Martin, blocked two sets of combinations on concern they would lead to a concentration of ``economic power in the hands of an even smaller number of very large institutions.''

Jim Flaherty, the current Finance Minister, has said that re-examining the issue isn't a priority for the ruling Conservative government.

Canadian bank mergers are ``never going to happen,'' Toronto-Dominion Chief Executive Officer Edmund Clark said yesterday in an interview on Business News Network television. ``I think it's a great thing that the five Canadian banks are stopping talking about mergers, which I think is a distraction.''
Financial Post, Duncan Mavin, 3 October 2007

Royal Bank of Canada has made a splashy Caribbean acquisition, muscling in on the territory of Canadian rivals Bank of Nova Scotia and Canadian Imperial Bank of Commerce, and is now set to expand further into Latin and Central America.

The bank said yesterday it has bought Royal Bank of Trinidad and Tobago (RBTT) for $2.2-billion, a move that sees it go head-to-head with Scotiabank and CIBC, which both have growth plans in the region.

Canada's largest bank also says its acquisition is just the first step in a wider Americas strategy, with retail-banking activities in Latin and Central America next on the agenda.

"An Americas strategy for banking is not a bad way to think about our future steps," said Peter Armenio, RBC's head of U.S. and international banking.

Scotiabank, which earns more than 25% of its profit outside of Canada, has long held the unofficial title of Canada's most international bank, thanks to extensive retail-banking operations in Latin and Central America.

But RBC appears to be threatening Scotiabank's title. RBC already earns about 35% of its profit from U.S. and international operations, and aims to increase that figure to almost 50%,Mr. Armenio said.

RBC has investment-and private-banking operations in several countries in Latin America, including Brazil, Uruguay and Venezuela. The bank is opening offices in Mexico, Panama and Chile and another office in Brazil in the next year.

Mr. Armenio said the RBTT acquisition now provides a retail-banking infrastructure in the region that can be expanded into other countries in the Americas where the bank has existing operations.

The deal "marks RBC's renewed focus on growing its international presence," said Blackmont Capital bank analyst Brad Smith.

But although the bank definitely has enough capital to embark on an international-banking spree, it remains to be seen whether RBC can emulate Scotiabank's overseas success, said Dominion Bond Ratings Services banking analyst Brenda Lum.

RBC does not have the same experience as Scotiabank in adding foreign banks to its empire, she said.

For now, the RBTT deal sees RBC become the fourth-largest bank in the Caribbean with US$13.6-billion in assets, behind third-place Scotiabank (US$16.1-billion) and just ahead of CIBC (US$12.3-billion.)

RBC will increase its branch presence in the Caribbean to 130 branches from 46.

Scotiabank has 200 branches in the Caribbean. CIBC subsidiary FirstCaribbean International Bank (FCIB), which had been considered a possible buyer of RBTT before RBC stepped in, has more than 100 branches.

RBC's Mr. Armenio said it will be "kind of fun" to compete with Scotiabank and CIBC in the region "with a little more armour."

RBC is paying an 18% premium on RBTT's closing share price from Friday. The board of directors at the Caribbean bank has unanimously recommended the deal to shareholders, and the acquisition is expected to close in mid-2008.

"We view this acquisition as strategically positive with minimal near-term earnings impact," said Blackmont's Mr. Smith.
The Globe and Mail, Tavia Grant, 3 October 2007

Royal Bank of Canada has returned to the Caribbean, encroaching on turf occupied by Canadian rivals and gaining a springboard for further expansion in the region.

Canada's largest bank will buy Trinidad and Tobago-based bank RBTT Financial Holdings Ltd. for about $2.2-billion in cash and stock, RBC's second international deal in two months as it spreads into faster-growing markets outside Canada.

The bank will combine its 46 Caribbean retail branches with RBTT's 84 branches, and aims to eventually make its new Port of Spain headquarters a hub for further expansion in both the Caribbean and Latin America.

“This deal creates an ideal platform for further growth,” Peter Armenio, RBC's head of U.S. and international banking, said in an interview from Trinidad. “We're going to have much more infrastructure now in the Caribbean to be able to take advantage of these other opportunities.”

RBC will, for the foreseeable future, focus on integrating operations. But buying the Trinidad bank will give it access to new markets in countries such as Aruba, Jamaica and Suriname. RBTT has also done financing deals in Costa Rica and Guatemala in the past year. The combined bank will be the fourth largest in the Caribbean, ranking just below Bank of Nova Scotia and a notch above Canadian Imperial Bank of Commerce's FirstCaribbean International Bank.

The Caribbean has become a hot spot for international investment in recent years. In Trinidad and Tobago, the region's largest oil and gas producer, the economy has grown by an average 6 per cent a year since 2002. Canada, China and the U.S. all want to boost trade ties with the region.

The purchase will give RBC more corporate relationships in the region, but also “there's no question that the middle class is definitely moving forward,” Mr. Armenio said. “More people are not only using banking, they're using wealth management and using other things.”

This is a return of sorts for RBC, which had operations in Trinidad and Tobago from 1902 to 1987. RBTT's origins date to when the Union Bank of Halifax opened a Port of Spain branch in 1902. RBC subsequently bought the business amid booming imports of sugar, cocoa and corn to Canada and exports of grain, horses and salted cod to the region.

RBC stuck with the bank for the next 85 years, selling its controlling stake in 1987 as it streamlined operations and began to focus on the U.S.

The deal announced yesterday will expand RBC's Caribbean presence to 18 countries and territories in the region. It stomps squarely on the territory of Scotiabank, which prides itself on being Canada's most international bank.

The best thing about yesterday's deal “is that it's not in Canada,” said Blackmont Capital analyst Brad Smith. “It broadens RBC's opportunities beyond our borders. The growth prospects [in Canada] are rather limited.”

The bank has repeatedly highlighted the region as a growth possibility and in April bought a 50-per-cent stake in Bahamas-based Fidelity Merchant Bank & Trust Ltd.

Suresh Sookoo, the RBTT chief executive who will assume the reins of the new Caribbean operations, said other Canadian banks have been nosing around for the past year, “one in particular.” RBC kicked the tires in 2005, kept in contact and came back on a more serious note in June.

RBTT's board has approved the deal and recommends shareholders back it. The deal is an 18-per-cent premium over RBTT's closing shares on Friday and is expected to add to RBC's earnings by the middle of next year.

RBTT is the second-largest bank in Trinidad and the third largest in Jamaica. Its main challenge of late has been its asset management business, which has seen profits fall due to lower fees associated with a falling local stock market.
BMO Capital Markets, 2 October 2007

Details & Analysis

Royal Bank (RBC) voluntarily exited banking in the twin island republic of Trinidad and Tobago about 20 years ago. As such, there will be some degree of irony if recent speculation of RBC acquiring Royal Bank of Trinidad and Tobago (RBTT) is true. We have speculated in the past (March 22, 2006 - Options in the Sun and January 9, 2007 - Caribbean Opportunity), that either CIBC or Royal Bank would acquire control of RBTT, so this isn't unexpected. Regulatory (or political) risk aside, this does appear to be the final chapter in the ongoing saga of who will get RBTT.

Subject to the specifics of any possible individual transaction, we would broadly view an acquisition of RBTT by RBC as a modest positive for RBC and minor negatives for both CIBC and BNS. We believe that the merged entity would become a more powerful player in the region, with a deep pocketed parent and a more diversified banking footprint. We maintain our Outperform rating on Royal Bank shares. As opposed to Centura and the bank's ongoing attempt to develop critical mass in the U.S., this deal would, in a single transaction, make RBC a meaningful competitor in the region.

Caribbean Banking – A Good Business

First and foremost, banking is a play on the domestic economy. As such, the strength of the economies of the region is a strong underpinning for any financial institution operating in these markets.

Second, banking is largely a regional business so that most banking franchises can compete capably if they have a 'top three' position.

Third, we believe that the Canadian banks have shown themselves to be very capable of operating highly successful, branched-based Personal and Commercial Banking operations. Much of this is because a lack of domestic merger activity has focused them to build, rather than buy, growth

Fourth, we believe that it is possible to operate a Pan-Caribbean banking footprint. This means that while each market is small, it is possible to coble together a reasonablesized operation.

Lastly, the Canadian banks have tremendous history in the region with connections going back to trading links between the Maritimes and the West Indies.

A Bit of Background on RBTT

RBTT is a very strong Trinidad and Tobago (T&T) based bank. It operates approximately 80 branches with top three market positions in T&T, Jamaica and the Dutch Antilles. Its long-term track record is excellent, with consistently high ROE, sound corporate governance and internationally accepted accounting standards.

Having said that, RBTT has produced disappointing earnings for the past several years, particularly when considered in the context that its core market, T&T, is a petrochemical-based economy which has achieved strong GDP growth. Clearly, RBTT's attempts to build outside of T&T have been somewhat unsuccessful.

It is interesting to consider what a RBTT/RBC merger would look like. The new entity would be one of the largest financial groups in the Caribbean with strong market share positions in the four big economies of the English-speaking Caribbean, and pro forma earnings of over C$200 million. Using a 60:40 cash:stock deal, and assuming a full buyout (and more normal loan losses), the deal would be essentially neutral to RBC's earnings.

Timing Seems a Bit “Iffy”

On September 28, Trinidad and Tobago Prime Minister Patrick Manning dissolved parliament and called a national election for November 5. Historically, there has been sensitivity surrounding the existence of, and potential for additional, foreign ownership of banks in the Caribbean. As such, we consider the timing of a possible deal involving RBC and RBTT to be somewhat questionable.

Whatever the political backlash, there is little doubt that the investors, Board members and senior executives of RBTT are well plugged into at least two of the three parties in the upcoming election.


We are assuming that the speculated deal (sale of RBC branches for 20% of RBTT, followed by a cash and RY stock offer for all of RBTT at TT$40 per share) would be successful. Under these conditions, this would be a slightly positive deal for Royal Bank. We maintain an Outperform rating on RY shares.
Bloomberg, Sean B. Pasternak and Frederic Tomesco, 2 October 2007

Royal Bank of Canada, the country's largest bank, agreed to buy RBTT Financial Holdings Ltd. in Trinidad and Tobago for about $2.2 billion to more than double its Caribbean branch network.

RBTT shareholders will receive about TT$40 ($6.37) a share, 60 percent of which will be in cash and 40 percent in Royal Bank shares, Toronto-based Royal Bank said today in a statement.

Royal Bank, which has 46 branches in Caribbean countries such as the Bahamas and Cayman Islands, is taking advantage of a soaring Canadian dollar to expand in that region, joining Bank of Nova Scotia and Canadian Imperial Bank of Commerce. Toronto- Dominion Bank, Canada's third-biggest lender, today agreed to buy New Jersey-based Commerce Bancorp Inc. for $8.5 billion.

"Canadian banks are strong in the Caribbean,'' said Ian Nakamoto, director of research at MacDougall, MacDougall and MacTier Inc. in Toronto, which manages $4.3 billion, including Royal Bank shares. ``They have a good history in that area.''

RBTT has $7.5 billion in assets, employs 5,400 and serves 1.3 million clients. Its acquisition will boost Royal Bank's Caribbean assets to $13.7 billion, spread out across 130 branches and 18 countries. W Holding Company Inc., the owner of Westernbank Puerto Rico, is the biggest bank in the Caribbean, with assets of about $17.5 billion as of March, Royal Bank said.

``The acquisition is advantageous in that it expands Royal Bank's presence in the growing region at a time when there are becoming fewer reasonable targets,'' Dundee Securities Corp. analyst John Aiken said in a note to clients.

Royal Bank is trying to catch up with Canadian rivals in the Caribbean. Scotiabank runs more than 200 branches there, and last year the Toronto-based bank spent $56 million to buy Jamaica's Dehring Bunting & Golding Ltd. CIBC has spent $1.3 billion since last year to increase its stake in Barbados-based FirstCaribbean Bank to 91.4 percent.

Adding RBTT also may allow Royal Bank expand to Latin America, said Peter Armenio, head of U.S. and international banking for the bank.

The transaction ``provides a platform for future expansion beyond the Caribbean, as we start to took at other places around Central and Latin America where we do have other businesses,'' Armenio told analysts on a conference call. He didn't elaborate.

RBTT has Canadian roots. It was incorporated in Halifax, Nova Scotia, in 1856 and was owned by Royal Bank before the lender sold control in 1986, said Brad Smith, an analyst at Blackmont Capital in Toronto.

``We believe this renewed commitment would signal the emergence of a new, capable market competitor,'' Smith wrote in an Oct. 1 note to clients. The proposed transaction was reported by the Trinidad and Tobago Express newspaper on Sept. 30.

The Port of Spain-based bank was ranked first in Trinidad and Tobago for capital adequacy by financial publication The Banker, according to RBTT's Web site. In April, RBTT said it was considering a possible combination or partnership for its business, according to its Web site.

Royal Bank said its offer is 18 percent more than the closing price of RBTT shares on Sept. 28. Royal Bank shares rose 60 cents to C$56.53 by 4 p.m. in Toronto Stock Exchange trading today. RBTT shares rose 99 cents to TT$35.

The transaction will probably close by mid-2008 and bolster per-share earnings next year, Royal Bank said.

Canadian lenders have spent more than $7.5 billion in global takeovers this year after the Canadian dollar climbed to parity with the U.S. currency for the first time since 1976.

For Royal Bank, this would be the biggest purchase since it bought Raleigh, North Carolina-based Centura Banks Inc. for $2.28 billion six years ago. The bank agreed on Sept. 6 to buy Alabama National BanCorp. for $1.6 billion in cash and stock to add 103 branches in Alabama, Florida and Georgia.
The Globe and Mail, Tara Perkins, 1 October 2007

The Royal Bank of Canada is close to buying RBTT for more than $2-billion (U.S.) in a deal that would be among the biggest acquisitions in the Caribbean in recent times, the Trinidad & Tobago Express reported this weekend.

The takeover would be paid for with a mix of cash and shares, and has already won approval from key shareholders, the newspaper reported, citing unnamed sources. RBTT's board of directors is close to giving its approval, the newspaper said.

Royal Bank spokeswoman Beja Rodeck said Monday that, "as a corporate policy we don't comment on market rumour and speculation."

RBTT has been up for sale for some time. In April, its chairman suggested a deal was on the way. The bank then said it had been invited to enter into other strategic discussions, and that it was extending its process in order to properly consider any and all opportunities.

Royal Bank was never counted out, however, recent speculation had focused on Canadian Imperial Bank of Commerce and Bank of Nova Scotia, which had both demonstrated interest in expanding their regional Caribbean market presence, Blackmont Capital analyst Brad Smith wrote in a note to clients Monday.

"Although yet to be confirmed, the acquisition would mark a renewed commitment by RBC, which operates 43 branches in the Caribbean, to expand in a region that had been de-emphasized following the 1986 sale of its controlling interest in RBTT," he wrote.

He added that the renewed commitment "would signal the emergence of a new and capable market competitor, making operating conditions more challenging for existing market participants."
Bloomberg, Sean B. Pasternak, 1 October 2007

Royal Bank of Canada is close to buying RBTT Financial Holdings Ltd., the largest bank in Trinidad & Tobago, for at least $2 billion, the Express newspaper reported on its Web site.

Royal Bank has already won support from several of RBTT's largest shareholders, the newspaper said, without citing anyone. The offer would be 60 percent cash and 40 percent Royal Bank stock, the report yesterday said.

Toronto-based Royal Bank trails Canadian competitors Bank of Nova Scotia and Canadian Imperial Bank of Commerce in the Caribbean. The bank owned a controlling stake in RBTT until about 20 years ago, said Blackmont Capital analyst Brad Smith. RBTT has assets of $7 billion, the newspaper said.

The purchase ``would mark a renewed commitment by RBC, which operates 43 branches in the Caribbean, to expand in a region that had been de-emphasized following the 1986 sale of its controlling interest in RBTT,'' Smith wrote today in a note to investors.

Royal Bank spokeswoman Beja Rodeck declined to comment. Royal Bank is Canada's largest lender.
Tridinad & Tobago Express, Carmini Marajh, 30 September 2007

In what is likely to be the biggest takeover deal in the Caribbean in recent times, Royal Bank of Canada (RBC) is getting ready to buy out local banking giant, RBTT, in an acquisition priced at well over US$2 billion.

Sources report that an acquisition agreement is close to sign off by the Peter July-led Board of RBTT Directors.

The RBC offer is said to contain a mix of cash and stock in a buyout that sources say has already secured the approval of key shareholders, among them the National Insurance Board (NIB) which has a 22 per cent interest, Guardian Holdings Ltd, a 14 per cent stakeholder and business tycoons Arthur Lok Jack, Richard Azar and Imtiaz Ahamad, who are listed among the largest individual stakeholders.

And while the Peter July board has refused to say anything more than the bank is having "strategic discussions with other parties", the Sunday Express understands that RBC, the latest in a series of Canadian suitors to knock on RBTT's door, is the favoured partner for a takeover deal.

Both have financial incentives to see the deal through, according to financial sources. RBC, Canada's largest bank is flush with acquisition dollars, assets of Can$563 billion and a market capitalisation of Can$69 billion.

It is also trailing behind rivals Bank of Nova Scotia and First Caribbean International Bank (FCIB),a subsidiary of Canadian bank, CIBC in its Caribbean operations.

RBTT, Trinidad's largest bank with assets of US$7 billion, has stumbled in recent years on issues related to management, flat earnings and growth limitation.

The RBC offer, comprising 60 per cent cash and 40 per cent RBC stock, if approved by shareholders, would give RBTT stockholders a much-needed boost with an option of cash and RBC shares - Can$55.26 at the close of trade on the Toronto Stock Exchange on Friday.

The buyout offer of a flat TT$40 per RBTT share plus RBC equity, according to sources, has found favour with a substantial block of RBTT shareholders.

Exploratory talks aimed at securing the requisite foreign ownership licence from the regulatory agencies and the Patrick Manning Government have reportedly gone well, said sources, adding that the RBC buyout of the local bank has been given the green light to go ahead.

And while the acquisition might be close to being a done deal, Central Bank Governor Ewart Williams, on Friday, told the Sunday Express that the Bank was yet to be "formally notified".

A not unusual event, said sources close to the deal, noting that one option being looked at as an initial part of the transaction is the sale of RBC's Caribbean banking interests to RBTT.

This manoeuvre would give RBC an immediate foothold into RBTT as a 20-plus per cent stakeholder.

Still to be worked out, however, is the price of RBC shares which are to be listed on the local Stock Exchange under the depository receipt system used on the Nasdaq and other major Exchanges where a specified number of shares of foreign companies are issued and traded.

Sources say the listing of a big international bank like RBC on the TT Stock Exchange would be a major coup for this country and could well catapult Trinidad centre stage and a step closer to the Prime Minister's dream of making this country the financial capital of the Caribbean.

Financial analysts say if 20 per cent of the cash or $TT1.6 billion from the RBTT sale goes back into the local market, it could help the recovery process of the stock market which has been in the doldrums in recent time.

Speculation of a takeover has seen RBTT stock climb from the start of September by $3 closing at the end of trade on Friday at $34.01.

GHL, a substantial shareholder in RBTT, has also benefitted from the market speculation, closing at $25 on Friday after starting September at $20.02.