RBC Royal Bank deposits contract as rivals grow

Marcella Scarlett, Business Reporter

RBC Royal Bank Jamaica lost close to one-tenth of its deposit base in just three months, a shift of resources by some savers that happened while the bank was finalising plans to shed the trappings of previous regional owner, RBTT.

The Minna Israel-led bank's performance stands in contrast to its six peers, all of which grew deposits over the January to March 2011 period.

Bank of Jamaica estimated that the trove of savings held by the seven commercial banks had climbed to J$383 billion, up marginally by 0.9 per cent from December 2010. But the central bank's data also reveals that RBC Royal Bank was the cause of the low performance, having lost J$3.7 billion of its deposits, which fell from J$40.2b to J$36.6b in the same period - a 9.15 per cent drop.

The other six banks reflected increases in their deposit base: Scotiabank's rose by J$2.4b to J$146b; NCB by J$2.6b to J$137b; while the others reported gains ranging from J$302m to J$741m.

RBC Jamaica acknowledged the fall in deposits, as well as its loan portfolio, but has chosen not to comment on the cause of the downshift. The head of finance said through communications officer Annette Atkinson that the Canadian banking group to which it belongs was in a "quiet period".

However, the bank's recent entry into the mortgage loan market suggests that Israel and her team are trying new ways to drive up business.

Still, financial analyst John Jackson said RBC Royal Bank is currently perceived as being "less aggressive" in going after business and more cautious about risk. Jackson recounted an incident where a customer approached the bank for a loan with the intention to use shares to collaraterise the debt, but was advised that this cannot be done as the bank required real estate.

Another client told Wednesday Business that the bank has been tightening its overdraft and credit card policies.

RBC Jamaica is also underperforming on loans in a market racked with delinquencies and a rising non-performing portfolio that hit J$17 billion or 6.9 per cent of total loans in March. RBC's share of toxic debt is unknown.

It holds 11.35 per cent of the loan market, but that represents a decline from 12.71 per cent stake at yearend 2010.

RBC Jamaica's overall standing in the commercial banking sector remains No. 3 by assets - J$56 billion; by loans - J$27 billion; by deposits - J$36 billion; and by capital - J$10 billion.

However, No. 4 bank CIBC FirstCaribbean Jamaica has closed the space between them, having narrowed the asset gap of J$10 billion in December to J$7.5 billion in March, central bank data shows.

marcella.scarlett@gleanerjm.com