RBC Fi­nan­cial (Caribbean) Ltd, the par­ent com­pa­ny of RBC Roy­al Bank (Trinidad and To­ba­go) re­duced its cap­i­tal by US$200 (TT$1.36 bil­lion), in a move the Cana­di­an-owned bank said yes­ter­day it was un­able to pro­vide any com­ments on..

In a no­tice to cred­i­tors, dat­ed Ju­ly 25, 2024, RBC Fi­nan­cial ex­plained that at a meet­ing of the com­pa­ny's board of di­rec­tors on June 25, 2024, it was rec­om­mend­ed that a res­o­lu­tion of the sole share­hold­er of the bank be passed to re­duce the stat­ed cap­i­tal of the com­pa­ny.

On Ju­ly 12, 2024, the sole share­hold­er of RBC Fi­nan­cial ap­proved the re­duc­tion of the bank's stat­ed cap­i­tal by the TT-dol­lar equiv­a­lent of US$200 mil­lion "for the pur­pose of mak­ing a dis­tri­b­u­tion to the hold­ers of the or­di­nary shares of RBC Fi­nan­cial on record on the date the cap­i­tal re­duc­tion oc­cured."

RBC Fi­nan­cial is in­cor­po­rat­ed in T&T, but is a whol­ly owned sub­sidiary of RBC Hold­ings (Bar­ba­dos). The T&T com­pa­ny's ul­ti­mate par­ent com­pa­ny is the Roy­al Bank of Cana­da,

RBC Fi­nan­cial's no­tice to cred­i­tors con­tin­ued, "This cap­i­tal re­duc­tion does not af­fect the op­er­a­tions of RBCF­CL and we re­main com­mit­ted to main­tain­ing strong re­la­tions with our clients, em­ploy­ees and com­mu­ni­ties across the Caribbean."

The no­tice to cred­i­tors stat­ed that it was strict­ly a for­mal­i­ty re­quired un­der the Com­pa­nies Act and that "all cred­i­tors of the com­pa­ny will be paid."

In its con­sol­i­dat­ed fi­nan­cial state­ments for 2023, RBC Fi­nan­cial (Caribbean) dis­closed that its stat­ed cap­i­tal, for the 12-month pe­ri­od end­ed Oc­to­ber 31, 2023, was $12.065 bil­lion (US$1.77 bil­lion).

Low­er­ing its cap­i­tal by US$200 ($1.36 bil­lion) rep­re­sents a 11.2 per cent re­duc­tion of its cap­i­tal as at Oc­to­ber 31, 2023.

In the RBC Fi­nan­cial chief ex­ec­u­tive of­fi­cer's re­port, which was dat­ed Jan­u­ary 25, 2024, Dar­ryl White said, "...our reg­u­la­to­ry cap­i­tal ra­tio at year end stood at 27.30 per cent, which is well above reg­u­la­to­ry thresh­olds."

For its 2023 fi­nan­cial year, RBC Fi­nan­cial Caribbean re­port­ed net prof­it af­ter tax from con­tin­u­ing op­er­a­tions of $1.07 bil­lion, which was 18.3 per cent more than the $907.8 mil­lion the fi­nan­cial in­sti­tu­tion re­port­ed in its 2022 fi­nan­cial year.

In re­sponse to 11 ques­tions from Guardian Me­dia yes­ter­day, RBC Fi­nan­cial's se­nior man­ag­er, cor­po­rate com­mu­ni­ca­tions, Caribbean, An­drew Knowles, said, "We ap­pre­ci­ate your in­ter­est, but are un­able pro­vide any com­ments at this time." Knowles is based in The Ba­hamas.

Among the 11 ques­tions asked of the bank hold­ing com­pa­ny were:

* Is the cause of the com­pa­ny’s cap­i­tal re­duc­tion the law­suit brought against the com­pa­ny by ben­e­fi­cia­ries of the T&T bank’s ESOP?

* Why wasn’t this no­tice filed with the T&T Se­cu­ri­ties and Ex­change Com­mis­sion (TTSEC)? and

* Does RBCF­CL’s re­duc­tion in cap­i­tal fore­shad­ow its de­par­ture from the Caribbean?

Nei­ther the TTSEC nor the Cen­tral Bank of T&T re­spond­ed to ques­tions on RBC Fi­nan­cial's re­duc­tion of cap­i­tal by US$200 mil­lion up to late last night.

Reg­u­la­tors all over the world re­quire banks to hold a cer­tain amount of cap­i­tal—cal­cu­lat­ed as a per­cent­age of their as­sets—so they are less like­ly to fail, seek a gov­ern­ment res­cue, or trig­ger a fi­nan­cial cri­sis, ac­cord­ing to a 2024 com­men­tary on the Brook­ings web­site, head­lined 'What is bank cap­i­tal?'.