EUROPE – Dexia and Royal Bank of Canada are to combine their institutional investor services businesses in a joint venture that will have US$1.8trn (€1.47trn) in assets under custody.
They said the move would give them the scale to look for larger mandates. The venture would have revenues of C$810m (€527.8m) and net income of around C140m.
The new entity, RBC Dexia Investor Services, will be 50:50 owned by the two banks and have €500m in ‘net tangible equity’. It will be based in London.
RBC’s José Placido will be chief executive of the new group. He’s currently executive vice president at RBC Global Services. Dexia board member Marc Hoffmann will be chairman.
"RBC Dexia IS clients will benefit from the size, product breadth and high touch client service of two well-respected and well-financed global banks," Hoffmann said.
"We are excited by what RBC Dexia IS can provide for our current and future clients," Placido said. "We will focus on achieving long-term growth by providing institutional investors with an integrated proposition of global custody, fund and pension administration, transfer agency and related services.”
The new firm will have 3,500 employees and operations in 15 countries.
The two firms said the deal would create a “powerful franchise to compete in the high-growth securities services industry”, with attractive synergies in the medium term.
It would provide greater scale “for lower per-unit cost, an ability to compete for larger mandates and increased return on investments”.
“This is good news for Dexia’s clients,” said Richard Hogsflesh of R&M Consultants, saying it would give them access to an efficient service provider. “It’s difficult to survive in this world as a small player.”
He added: “This is extremely good news for RBC. They’ve been wanting to do something like this for a long time. This transaction will enable them to do that.”
Operations will be conducted mainly by RBC Dexia Investor Services Bank in Luxembourg and RBC Dexia Investor Services Trust in Canada. The transaction is expected to close by early 2006.