ROYAL Bank of Canada (RBC) will take a CAD$60 million ($5.9 billion) loss on the sale of its Jamaican operations to Sagicor Group Jamaica (SGJ).

The sale price of approximately $9 billion closely reflects the book value of RBC Jamaica’s operations and at least covers the $5 billion in new capital the Canadian bank injected into local operations since December 2011.

But “an estimated writedown for the proportionate share of RBC Jamaica’s goodwill and other intangibles acquired by RBC in connection with its acquisition of RBTT Financial Group in 2008” will result in a loss.

Sagicor admitted that some job cuts could occur in the short-term.

“This new bank will have the opportunity to grow, having said that you would expect that where there is some overlap between the current banking operations at Sagicor, which is fairly small, and the RBC operations, which is much bigger, there will be some restructuring,” said Richard Byles, president and chief executive of Sagicor Group at a press conference held on Wednesday. “But I think that in the medium-term and long-term there will be growth not just in

terms of business but in terms of people.”

Having racked up over $9 billion in losses over the past four and a half years, RBC Jamaica has been restructuring its organisation for some time now, and last May, it closed four of its branches, leaving 13 open, and cut its workforce by 10 per cent to 630.

The commercial bank struggled due to the bad debt loan portfolio, according to Byles ,who then explained that SGJ would remove those debts in its acquisition allowing the group to get a clean slate.

It will also see the transference of balance sheet void of government paper investments.

“Government paper is not the path to growth in the future,” said Byles. “This balance sheet that we are acquiring has literally no government paper–literally none. It has assets which are loans, which is the business of banking. Going forward what we see driving growth will be loans.”

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, although other rival institutions were also having discussions with RBC.

SGJ closed the deal subject to government approval just after midnight on Wednesday.

“Consistent with our strategy of being a competitive leader in the markets where we operate, we determined after a careful and thorough review that the best decision for the long-term future success of RBC Jamaica was to sell to Sagicor,” said Suresh Sookoo chief executive at RBC Caribbean in a press release. “Sagicor is a well established financial franchise in Jamaica with the size, scale and complementary capabilities that RBC Jamaica does not currently possess.”