Bloomberg News

Royal Bank of Canada in Talks to Buy Dexia Stake in Venture

October 11, 2011

(Updates with closing share price in last paragraph.)

Oct. 11 (Bloomberg) -- Royal Bank of Canada, the country’s largest bank, is in talks with Dexia SA to buy the 50 percent of RBC Dexia Investor Services it doesn’t already own.

Royal Bank, which has right of first refusal to buy the stake, is in “advanced” talks with Dexia, Luxembourg Finance Minister Luc Frieden told reporters yesterday.

“RBC said they will make use of this right of pre-emption which means that before any solution can be envisaged, we have to let the negotiations between RBC and Dexia continue,” Frieden said.

Royal Bank spokeswoman Katherine Gay declined to comment.

Dexia’s board is meeting to review a plan under which the lender would set up a “bad” bank for its troubled assets and seek sellers for remaining units.

France and Belgium are coming to Dexia’s rescue three months after it got a clean bill of health in European Union regulators’ stress tests, and three years after they injected capital to save the company during the 2008 credit crunch.

The global custody partnership was established by the French-Belgian bank and Toronto-based Royal Bank in January 2006 and is based in London, according to the RBC Dexia website. The company had about $3 trillion in client assets under administration as of June 30.

Royal Bank may spend C$300 million ($292 million) to C$400 million for the stake in the business, Barclays Capital analyst John Aiken wrote in an Oct. 4 note to investors.

Royal Bank rose 65 cents, or 1.4 percent, to C$47.95 at the close in Toronto.

--Editor: David Scanlan, William Ahearn

To contact the reporter on this story: Sean B. Pasternak in Toronto at spasternak@bloomberg.net.

To contact the editors responsible for this story: David Scanlan at dscanlan@bloomberg.net; David Scheer at dscheer@bloomberg.net.


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