Royal Bank of Canada, the country’s largest lender, is seeking buyers for its U.S. consumer banking operation a decade after entering the market, said three people with knowledge of the talks.
Royal Bank is getting advice from JPMorgan Chase & Co. on the potential sale of the RBC Bank unit, said the people, who spoke on condition of anonymity because the talks are private.
Royal Bank spokeswoman Katherine Gay declined to comment on a potential sale of RBC Bank and said the bank remains committed to its U.S. growth strategy.
The Canadian lender is retreating from U.S. consumer lending after investing about $4.6 billion in the last decade to buy banks in southeastern states including North Carolina, Florida and Alabama. Toronto-based Royal Bank is pulling out as competitors Toronto-Dominion Bank and Bank of Montreal expand by acquiring troubled U.S. lenders in Florida and Wisconsin.
The international-banking unit, which includes Raleigh, North Carolina-based RBC Bank, had 10 consecutive quarterly losses before returning to profitability in the first quarter of 2011, according to the bank’s financial statements. RBC Bank is the smallest of Royal Bank’s U.S. operations, which also include wealth management and the RBC Capital Markets investment bank.
RBC Bank had $4 billion of equity capital and $27.6 billion of assets as of Dec. 31, according to data on the Federal Deposit Insurance Corp.’s website.
The Canadian lender has spent two years reorganizing RBC Bank, which started after the lender took a C$1 billion ($1 billion) writedown on the U.S. business. RBC Bank suffered losses due to impaired loans from homebuilders and other business clients during the U.S. subprime meltdown and financial crisis.
During the restructuring, Royal Bank cut more than 1,000 jobs, replaced management, reduced ties to real estate and pared commercial lending to restore profit at the bank, which has more than 420 branches.
Royal Bank Chief Executive Officer Gordon Nixon said in a March 2010 interview that “everything is on the table” in weighing options for its U.S. consumer bank, including a sale, merger or takeovers to revive the business. Nixon said during a Jan. 11 banking conference this year in Toronto that he’s unsure whether Royal Bank would be a buyer or seller of U.S. banking assets.
“In the short-term, our priority is to get the U.S. bank performing at a more normalized level,” Nixon said.
Royal Bank expanded in the U.S. with its 2001 takeover of Centura Banks, which was renamed RBC Bank. Royal Bank’s last U.S. retail bank acquisition was the $1.6 billion takeover of Alabama National BanCorporation in February 2008.
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