Sagicor Jamaica has agreed to pay JA$9 billion to the Royal Bank of Canada (RBC) for RBC Jamaica. The move will grow Sagicor's number of branches from four to 19. At an exchange rate of JA$107.19 for US$1, the sale will go through for approximately US$84 million.
Standard & Poor's Ratings Services said its BB+ financial strength and issuer credit ratings on Sagicor Life Inc (Sagicor) and its BB- ratings on Sagicor Finance Ltd's $150 million, ten-year senior unsecured notes are unaffected following the insurer's January 29 announcement of acquisition of RBC Royal Bank (Jamaica) Ltd and RBTT Securities Jamaica Ltd.
The ratings agency said: "The transaction represents about eight per cent of Sagicor's investment portfolio in Jamaica and three per cent of its total investments. According to our analysis of capital adequacy and liquidity, the acquisition won't add material risk to the group due to its size. "Additionally, this acquisition won't increase Sagicor's exposure to Jamaica because it will fund the transaction with resources already allocated to that country."
The transaction is subject to regulatory approvals by Jamaican authorities.On Wednesday, an RBC release from Toronto announced that Sagicor "will be acquiring RBC Royal Bank (Jamaica) Ltd and RBTT Securities Jamaica Ltd (collectively RBC Jamaica) from Royal Bank of Canada"."The acquisition, subject to all regulatory approvals, is expected to be finalised in the coming months. The purchase price of the agreement is estimated at JA$9 billion."
Richard Byles, president and CEO of Sagicor Group Jamaica, said the move to acquire RBC's Jamaican operations "provides the opportunity to expand Sagicor's banking footprint, allowing us to serve our customers better".
He added: "The acquisition of RBC Jamaica is a critical step in fulfilling our vision to build out a bank that is based on customer satisfaction and convenience, and we have confidence in RBC Jamaica's dedicated employees to help deliver this vision. This transaction allows us the opportunity to have a substantial distribution network and to provide value added services to our clients through more branches and ATM locations islandwide."
Looking forward on the acquisition's impact on customers of both institutions Byles said: "Upon closing, Sagicor intends to provide RBC Jamaica customers with the excellent service and product expertise that they are accustomed to, and looks forward to welcoming them to the Sagicor family."
RBC Caribbean head Suresh Sookoo said: "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 it to Sagicor."Sookoo said Sagicor was a well established financial franchise in Jamaica with the size, scale and complementary capabilities that RBC Jamaica does not currently possess.
Byles added: "We recognise the long and difficult journey ahead for the country. However, this purchase shows the confidence Sagicor has in Jamaica and our commitment to playing our role in economic development."