BRIDGETOWN, Barbados -- Royal Bank of Canada’s credit rating downgraded two steps to Aa3 by Moody’s Investors Service because of the lender’s "significant exposure" to volatile capital markets activities.
The bank has been 1 of 15 global financial institutions which were hit in the downgrade. The rating review, initiated on 15 February, has now been concluded, stated Moody on its website.
Other banks and securities firms affected include American Bank of America Corp., Citigroup Inc. Goldman Sachs and JP Morgan Chase, as well as European-based Barclays Bank PLC, Deutsche Bank and Societe Generale. RBC was the only Canadian bank affected.
Royal Bank of Canada (RBC) is of immediate concern because of its operations in Barbados, as its long-term deposit rating has fallen to Aa3 from Aa1, though its outlook is stable.
In 2008, Royal Bank of Canada (RBC), Canada’s largest bank, acquired RBTT Financial Group for Bds$4.4 billion, which operated throughout the Caribbean region including Barbados. On May 2, RBTT Bank and RBC Royal Bank amalgamated to operate under a single legal entity, RBC Royal Bank (Barbados) Limited.
The question that will now stand is whether a downgrade of the bank will have any impact on banking service, and the Barbadian economy as a whole.