Sagicor buying RBC Jamaica
ABOUT the same time that RBC Royal Bank Jamaica was closing four of its branches last year, Sagicor Bank made it publicly known that it would become the third largest commercial bank within 10 years.
Less than a year later, Sagicor Group Jamaica is on the verge of acquiring RBC's Jamaican operations, according to highly reliable sources in the region.
The deal will vault Sagicor to the number three spot — up from sixth in terms of assets among commercial banks.
Market position aside, RBC has had difficulty realising a profit in Jamaica for some time -- it racked up over $9 billion in losses over the four-and-a-half years to September 30, 2013, mainly due to bad loans.
Even after reducing its branch network to 13 — closing four locations last May — and cutting its staff by 10 per cent, from 700 to 630, the commercial bank incurred over $1.1 billion in losses between April and September last year, according to Bank of Jamaica (BOJ) statistics.
The lack of profitability prompted RBC Jamaica's parent to prop up the ailing commercial bank by injecting close to $5 billion into it in exchange for new ordinary and preference shares since December 2011.
It's not yet clear how RBC will make out from the deal, but it will fast-track Sagicor's goals for Jamaica.
Sagicor's idea was to leverage its strong brand associated with its parent's dominant position in the insurance market and 500,000 customers locally.
Indeed, the commercial bank has managed to grow its loan portfolio, asset base and deposits at a faster pace than the rest of the industry.
And after getting its commercial bank licence in 2008, rebranding from PanCaribbean in December 2012, Sagicor Bank opened its sixth location islandwide on Hope Road last week.