Royal Bank agreed to take over the RBC Dexia partnership to expand a business that provides global custody, fund and pension administration, shareholder services and treasury. The transaction follows the breakup of Dexia SA (DEXB), the Belgian bank that lost access to short-term funding duringEurope’s sovereign debt crisis.

“This really puts us on a strong footing against all of the global peers that we compete with for business.” James Westlake, group head of international banking and insurance, said today in an interview. “We’re excited about the growth opportunities.”

Royal Bank said the acquisition will “moderately” add to earnings in 2013 while cutting the Tier 1 capital ratio by about 25 basis points. RBC Dexia had net income of 123 million euros ($164 million) last year.

“This should ultimately be a successful transaction, assuming that Royal is able to continue to grow the business,” John Aiken, an analyst with Barclays Capital, said today in a note. “We do not view the reduction in capital ratios as significant and believe that this is more than offset by the anticipated increase in earnings.”

Royal Bank will “get very aggressive” in expanding the business, with an “early focus” on Europe, followed by Asia and then South America, particularly Brazil, Westlake said.

“It’s really a great fit with our global growth strategy for both our wealth management business and our capital markets business,” Westlake said.

To contact the reporters on this story: Sean B. Pasternak in Toronto atspasternak@bloomberg.net; Doug Alexander in Toronto at dalexander3@bloomberg.net

To contact the editors responsible for this story: David Scanlan at dscanlan@bloomberg.net; David Scheer at dscheer@bloomberg.net

http://www.bloomberg.com/news/2012-04-03/royal-bank-of-canada-to-buy-dexia-stake-for-c-1-1-billion-cash.html

• U.S. Said to Seek More Than $10 Billion Penalty From BNP   (2014-05-30 09:35:40)
• Apple Agrees to Buy Beats Electronics for $3 Billion   (2014-05-29 09:42:30)
• JPMorgan’s Pinto Shuffles Deputies, Names Hernandez Unit Co-Head   (2014-04-08 08:55:29)
• JPMorgan Folds London Whale Office Into Another Unit   (2014-04-04 09:51:48)
• JPMorgan Folds London Whale Office Into Another Unit   (2014-04-04 09:51:29)
• JPMorgan Folds London Whale Office Into Another Unit   (2014-04-04 09:51:17)
• China Construction Bank Profit Beats Estimate on Margins   (2014-03-31 10:50:22)
• Madoff Aides Convicted in $17.5 Billion Ponzi Trial After Decades Working for Firm   (2014-03-25 13:24:38)
• Fed Revises Worst-Case Stress-Test Results for Biggest Banks   (2014-03-22 09:45:32)
• BofA, Citigroup, Credit Suisse Sued by FDIC Over Libor   (2014-03-15 10:32:09)