Fidelity Bank and Trust International Limited and the Royal Bank of Canada announced this week they had entered into a joint venture together.
Royal Bank will, subject to regulatory approval and standard closing conditions, acquire a 50 per cent interest in Fidelity’s wholly owned subsidiary, Fidelity Merchant Bank & Trust Limited.
The joint venture will not affect RBC’s or Fidelity’s operations in Cayman, and both institutions will continue to operate their current retail banking and other businesses in the region under their respective brands.
The new entity, called Royal Fidelity Merchant Bank & Trust will begin operations in The Bahamas and in Barbados upon closing of the deal, which is estimated to be within three months. In Barbados, RBC will transfer its investment and trust business to a wholly-owned Barbados subsidiary of Royal Fidelity.
Fidelity Chairman and CEO Anwer Sunderji said the deal will create a way for Royal Bank and Fidelity to enter new markets in the Caribbean.
‘From our point of view, we wanted to grow outside of The Bahamas,’ he said Wednesday.
However, the deal will also allow Fidelity to grow in The Bahamas as well.
‘This transaction validates our strategy in deploying resources to build our merchant bank subsidiary, which has established itself as the leading investment advisor and wealth management institution in The Bahamas,’ he said. ‘Through this transforming partnership with Royal Bank of Canada, Royal Fidelity will gain access to significant financial and technical resources that will enable it to grow rapidly within and outside The Bahamas.’
Mr. Sunderji explained that RBC had a gap in its products and services in the Caribbean. Fidelity Merchant Bank and Trust was the only merchant bank – or investment bank – operating in The Bahamas which provided the kind of products and services RBC was looking to add.
The deal was in the works for some 18 months, Mr. Sunderji said.
‘[The joint venture] is a combination of the Royal Bank of Canada’s financial capital and experience with Fidelity Bank’s intellectual capital,’ he said.
Michael Anderson, president of Fidelity Merchant Bank & Trust, will be president of Royal Fidelity.
Royal Fidelity will provide corporate finance and advisory services, investment management, stock brokerage, share registrar and transfer services, and pension and mutual fund administration.
In addition, Royal Fidelity clients will be able to obtain corporate finance services as well as corporate banking products, such as bridge loans, project finance, and term loans, along with wealth management and fiduciary services.
Mr. Anderson said customers will benefit from the new joint venture.
‘Clients… will benefit from RBC’s financial strength and extensive experience and capabilities in global capital markets and Fidelity’s innovative corporate finance and successful wealth management experience,’ he said.
Ross McDonald, RBC’s head of Caribbean banking said the joint venture extended his bank’s financial services platform in the Caribbean.
‘We are impressed with Fidelity’s merchant banking operations and view this transaction to be strategically important to our expansion plans in the Caribbean.’
Mr. Sunderji said there were specific jurisdictions of interest for expansion in the Caribbean.
‘We will be seriously exploring Jamaica and Trinidad as future possibilities,’ he said.
Having such a well-established financial institution like RBC as a joint venture partner will help the whole Fidelity Group, which includes Fidelity Cayman, Mr. Sunderji said.
‘People will see us as a successful company [RBC] wanted to do business with,’ he said.
‘We are very excited about it. It’s a new chapter for us.
‘For an institution we have grown from zero, it is an endorsement and validation of the commitment we have made over the last eight years to establish this bank.’