RBC Seeks to Sever Dexia Relationship
RBC trying to remove itself from troubled European bank.
BY Staff: Advisor.ca | October 11, 2011
Luxembourg Finance Minister Luc Frieden told reporters on Monday that RBC has right of first refusal and is in “advanced” negotiations with Dexia.
The struggling bank is highly exposed to some of Europe’s more indebted countries, including Greece and Italy. Fears that those countries could default are leaving other banks wary of lending to Dexia, and making it increasingly difficult for Dexia to fund its day-to-day operations. The Brussels-based bank is now selling off its assets and, over the weekend, agreed to a bailout by France, Belgium and Luxembourg.
The RBC Dexia partnership was established in January 2006 and has approximately $3 trillion in client assets under administration as of June 30.
While it’s uncertain what the price for the 50% stake would be, Barclays Capital analyst John Aiken estimated in an October 4 note to investors that RBC may spend between $300 million and $400 million.