On completion of the transaction, RBC will own 100% ownership of RBC Dexia, said the acquirer.
RBC Dexia is a global custodian that serves a diverse base of institutional investors through a wide range of advice and services including global custody, fund and pension administration, shareholder services and treasury services.
RBC president and chief executive officer Gordon Nixon said the firm has developed an in-depth understanding of the global custody business’ strong fundamentals and opportunities for growth through its longstanding Canadian custody operations and recently, through the RBC Dexia joint venture.
"It is a strong business that generates stable revenue in an attractive sector that is well positioned for long-term growth. It has a premier list of institutional investor clients globally and fits well with our diversification strategy," Nixon added.
As per the terms of the deal, RBC Dexia has sold EUR1.4bn (C$1.9bn) in nominal value of Dexia Group fixed income securities back to Dexia and acquired an equivalent amount of US dollar-denominated securities including notes issued by large global financial institutions.
RBC Dexia will incur a loss $30m after tax, from the sale of the Dexia Group securities, while its capital position is not materially impacted from this sale and purchase of securities, claims the seller.
The transaction is expected to reduce RBC’s 31 January 2012 Tier 1 capital ratio on a pro forma basis by approximately 25 bps.
Goldman Sachs and RBC Capital Markets assisted as financial advisors to Royal Bank of Canada in this transaction and it is subject to customary closing conditions, including regulatory and other approvals, expected to close in June 2012.
