Sagicor Bank triples capital base on RBC purchase

Sagicor Bank triples capital base on RBC purchase

Wednesday, October 01, 2014

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Sagicor Bank Jamaica (SBJ) nearly tripled its capital base with the acquisition of RBC Bank Jamaica.

The commercial bank — now the third largest in the country by assets -- had $13 billion in equity at the end of June, according to latest Bank of Jamaica (BOJ) data. The capital base stood at $4.8 billion three months prior.

CIBC FirstCaribbean International Bank (Jamaica) had $970 million more equity than SBJ as at June 30, but Sagicor's commercial bank jumped from sixth to fourth in terms of equity.

However, SBJ had $15 billion more assets and $19 billion more customer deposits that CIBC's Jamaican operations.

National Commercial Bank of Jamaica (NCB) leads the market in terms of assets, capital and loan portfolio, followed by Bank of Nova Scotia for all three measures.

The latest central bank data lumped SBJ with a deficit of $8.9 billion for the prior year. It was based on the difference of RBC's $10.2 billion deficit and SBJ's earning at $1.2 billion as at March 2014.

Sagicor did not respond to Observer queries on the reported deficit up to print time, but the unappropriated profits for the year to June 30 stood at $1.8 billion.

In June, Sagicor Group Jamaica (SGJ) President Richard Byles told shareholders that the full integration of RBC Bank Jamaica and SBJ would take about two years. He added that the acquisition would capture the "imagination" of executives over the period.

SBJ's deposits stood at some $55 billion as at June 30, up from $14.7 billion three months earlier in March 2014-- the acquisition added $38.9 billion in deposits from RBC while an additional $1.5 billion was added independent of the acquisition.

Sagicor announced in January that it would acquire RBC bank for $9 billion which closely reflected the book value of the Jamaica operations.

Royal Bank of Canada stated that it would take a CAD$60 million ($5.9 billion) loss on the sale of its Jamaican operations to SGJ.

It later upgraded that loss to CAD$100 million in total.

The local RBC operations recorded over $9 billion in losses over the past four-and-a- half years mainly due to bad debts.

The lack of profitability prompted RBC Jamaica's parent to inject close to $5 billion into it in exchange for new ordinary and preference shares since December 2011.

The commercial bank since last May closed four of its branches, leaving 13 open, and cut its workforce by 10 per cent.

SGJ ended its financial year with $6.29 billion net profit with equity of $35.9 billion. Its the 14th straight year of improved profits.

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