Income drops at RBC after Dexia buyout 28 May 2012Toronto Reporter: Georgina Lavers
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Royal Bank of Canada released its 2Q results, which revealed that for continuing operations, net income was at $1.56 billion, down 7 percent from $1.68 billion year-on-year.
However, profit from continuing operations excluding a loss tied to buying out its RBC Dexia Investor Services partner rose to $1.73 billion.
RBC’s move to take full control of global custody, fund and pension administration services provider RBC Dexia Investor Services was approved by the European Commission on 15 May.
RBC Dexia Investor Services is a joint venture between RBC and Banque Internationale à Luxembourg, which was previously called Dexia Banque Internationale à Luxembourg.
RBC and Banque Internationale each own 50 percent of the business, but the French-Belgium bank was reportedly forced to sell its stake after it fell victim to the European debit crisis and the 2008 credit crisis.
RBC announced its intention to buy Banque Internationale’s 50 percent stake in RBC Dexia in October 2011 and signed a definitive agreement to do so in April 2012. RBC paid €837.5 million (C$1.1 billion) to take full control of RBC Dexia.
Of the results, Gordon Nixon, RBC president and CEO, said: "Our solid second quarter results reflect continued business growth and an investment in a strategic acquisition with attractive growth prospects.”
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