RBC Jamaica deficits hit $10b
An unusually large tax bill and a big write-off of bad loans pushed RBC Royal Bank Jamaica deep into the red last year, with a reported net loss of $3 billion, according to its newly released annual financial statements.
The bank faced a tax bill of $1.84 billion after credits, due to a write-off of deferred tax assets. Its loan losses amounted to $1.2 billion.
RBC Jamaica's losses have now accumulated to $10 billion, up from $6.8 billion, but its equity base improved marginally to $9.2 billion because of an injection of fresh capital, including a new class of non-voting US dollar-denominated preference shares valued at about $3.8 billion.
At the bottom line, RBC Jamaica's losses appeared to have more than doubled from $1.44 billion in 2012 to $3.12 billion, but its pretax income painted a different picture.
Its financial performance improved from $2.03 billion of pretax losses in 2012 to $1.28 billion at year end October 2013, boosted by fees and other income even as its core revenue slipped.
The bank, which is being acquired by Sagicor Group Jamaica - the deal is subject to regulatory approval - has been struggling with underperforming loans over several years leading to takeovers of the former Wyndham hotel in New Kingston, and the unfinished Palmyra condo complex in Montego Bay, the latter in concert with National Commercial Bank. Both takeovers are the subject of legal challenges.
RBC Jamaica's non-performing loan portfolio was valued at more than $6.86 billion up to October, while the performing portfolio was valued just below $27 billion.
Amid its troubles, RBC Caribbean named Roger Cogle as managing director late last year. Cogle will assist with the transition to new ownership.
Sagicor Jamaica said it acquired the bank free of debt for $9.5 billion and will merge the operation with its boutique operation, Sagicor Bank Jamaica Limited. The acquisition includes inactive subsidiary RBTT Securities Limited.
BAD-DEBT PORTFOLIO SOLD
RBC, which is owned ultimately by Royal Bank of Canada, but overseen by regional subsidiary RBC Caribbean, said it sold the bad-debt portfolio ahead of the deal struck with Sagicor two weeks ago but declined to name the buyer.
Sagicor said the acquisition includes the bank's loan book of 8,000 clients and a customer base of about 120,000, as well as a branch network of 13 outlets and 42 automated banking terminals.
RBC Jamaica's deposit base is valued at $41 billion; its total assets are valued at $56 billion, inclusive of a loan portfolio of $32 billion and cash of more than $7 billion.
Once the sale of RBC is complete, Royal Bank, which re-entered Jamaica in 2008 through the regional acquisition of the RBTT Financial Group, will exit this market. Reports out of Trinidad that Royal Bank is looking to sell other assets to HSBC have been rubbished by RBC Caribbean.