Samuda wants disclosure on impact of RBC takeover on fees
BY ALICIA DUNKLEY-WILLIS Senior staff reporter email@example.com
CHAIRMAN of the Economy and Production Committee of Parliament, the Opposition's Karl Samuda, has called for the early release of details on how the proposed acquisition of RBC Royal Bank by Sagicor Group Jamaica (SGJ) will impact the pockets of customers of both institutions.
"Royal Bank must be one of the largest, if not the largest bank in Canada. To my knowledge this must be about their third attempt at being a sustainable bank in Jamaica and they have now given that bank over to one of the indigenous banks. So, we would want to know how they are going to reconcile the fees charged by RBC, and there are several, where RBC charged less. How are they going to reconcile these as they go forward," Samuda said during the meeting of the Committee at Gordon House in downtown Kingston on Tuesday.
Addressing Bank of Jamaica (BOJ) officials, who have been appearing before the committee to answer questions about its interim report from a survey of fees and charges by bank, Samuda said, "We would want to know as quickly as possible, for public consumption, exactly how they are going to approach these differentials because in a couple of instances they are quite significant".
"I don't know if this has occurred to the Bank of Jamaica, or, if you have any further information or what is the timeframe within which all of this can be made available to the customers from both banks. Because if it is that they are going to reduce the rates down to Sagicor's, for instance that existed previously, then customers from RBC will be in for a bit of a windfall where Sagicor was charging no fees, and vice versa," Samuda noted.
"We want to keep our eyes focused on it because for example, in the case of RBC and credit card annual membership fees it ranges from $2,825.74 to $5,948 per annum. In the case of Sagicor, the term here is N/A. Now I would like to be sitting as a customer of RBC when they integrate those charges it would be interesting to see what it levels off at," the committee chairman continued.
"Because if it levels off as anything that is a charge to the Sagicor customer, that would be an increase of significance and if they reduce it to the level of Sagicor that would be a windfall to the RBC customer. So it's not a thing that can linger for long. We have to assist the general public in knowing what is the strategy going forward," he added.
Gayon Hosin, deputy governor of financial institutions in BOJ's Supervisory Division, said the proposed acquisition of RBC by Sagicor is currently in front of the regulators for review.
"In the meantime, the two banks continue to operate as two separate banks so until that approval, until the actual coming together, they will continue to operate as they are. It's two very different models, one is a way more built up retail bank, one is a commercial bank that was formerly a merchant bank and is growing into commercial banking business," she said.
Hosin noted that the "cost structures of each of those two institutions would be very different based on how they operate and the model they operate by".
"What I expect will happen is that the business case will be determined by the new owners and they will roll out. Our job is to ensure that as they roll out and as they determine, consumers are given proper notice," she assured.
She said 'the type of rollout will extend to fees charged'.
"It will extend to service areas that they have, so there is the possibility that if both have a presence in a particular area that might be rationalised," she told the committee.
Furthermore, Hosin said the rollout will also impact staffing.
"We will have to see how that develops, we will have to see the business plans, feasibility studies and so on, but that is a business determination. The bank's role is to ensure that what we have in front of us is a sustainable viable operation going forward and one that treats with customers on a fair basis," she noted.
Having seen over $9 billion in losses over the past four-and-a-half years, RBC Jamaica has been restructuring its organisation and last May closed four of its branches, leaving 13 open, and cut its workforce by 10 per cent. RBC Jamaica had $32.1 billion in loans on its books up to the end of last September, when Sagicor Bank reportedly had $8.7 billion.The two companies started sale negotiations last November. Sagicor Group closed the deal subject to government approval just late last month.