A major change is in store for the European fund services market. Two major players in the market, Caceis and Royal Bank of Canada, have signed a memorandum of understanding to acquire RBC Investor Services' European operations and its centre of excellence in Malaysia. The services involved are custody, foreign exchange, fund administration, transfer agency, middle office and securities lending and borrowing.
With this move, Caceis will become a European giant and one of the world's leading fund service providers. From then on, Caceis will expand its client base, while offering an enhanced range of products. As Jean-François Abadie, CEO of Caceis, explains: "This combination with RBC Investor Services helps us consolidate our position as a leading European player in asset servicing.” He continues: "We are enhancing our leadership across a range of services, increasing our position in a number of key markets, growing relationships with global asset managers, and increasing our capabilities and scale.”
We are enhancing our leadership across a range of services, increasing our position in a number of key markets, growing relationships with global asset managers, and increasing our capabilities and scale.
Through this transaction, Caceis, a subsidiary of Crédit Agricole SA and Santander, will acquire a leading fund services provider in Europe. In the European market, RBC Investor Services has approximately €1,000bn of assets under administration and almost €500bn of assets under custody. Such volumes have placed RBC Investor Services on the list of banks directly supervised by the European Central Bank (ECB), of which there are five in Luxembourg.
A strategic retreat for RBC
As soon as the transaction is completed, Caceis will have €3.5trn of assets under administration and €4.8trn of assets under custody.
In addition to the increase in assets under management and custody, Caceis will also have a much more international dimension than at present, while strengthening its current position and covering the entire fund services value chain.
While a memorandum of understanding has been signed, the completion of the transaction is not expected before the end of the third quarter of 2023. Of course, the completion of the transaction is still subject to prior consultation with Caceis' employee representative bodies and to all required regulatory approvals.
This allows us to focus on our Canadian asset services franchise in our home market.
For its part, Royal Bank of Canada has given reasons for leaving the European market to strengthen its position in the Canadian market. "This allows us to focus on our Canadian asset services franchise in our home market.," said Francis Jackson, managing director of RBC Investor Services.
Some concerns
On the other hand, there may be some concern among the Luxembourg employees of RBC Investor Services. On 31 March 2021, the unions and the bank's management reached an agreement on a redundancy plan affecting 241 positions. This was already the third social plan. Nevertheless, the CEO of RBC Investor Services explained: "We are confident this proposed transaction will bring benefits to our clients and our employees.” The CEO of Caceis added that “the staff from RBC Investor Services will bring their expert knowledge of the servicing needs of international investor clients and distribution services.”
We are confident this proposed transaction will bring benefits to our clients and our employees.
RBC Investor Services was previously a key European fund services player, based in the Terres Rouges building in Esch-sur-Alzette. Initially a joint venture between Dexia and the Royal Bank of Canada, the Luxembourg entity was then called RBC Dexia Investor Services. In April 2012, Royal Bank of Canada finally announced the purchase of the shares of BIL (formerly Dexia Banque Internationale à Luxembourg) which held half of the structure. The price of BIL's stake in RBC Dexia Investor Services was €837.5m.
The announcement of the memorandum of understanding between Caceis and Royal Bank of Canada nevertheless marks a potential loss of influence for Luxembourg. RBC Investor Services is registered in Luxembourg and manages its operations for both Europe and the Asia-Pacific region (APAC), Caceis' Luxembourg presence is represented by a branch of Caceis Bank registered in France. About 1,200 employees work for Caceis in Luxembourg.
This story was first published in French on Paperjam. It has been translated and edited for Delano.