A major change is coming to the European fund services market. Two major players in the market, Caceis and the Royal Bank of Canada, have signed a memorandum of understanding to acquire the European activities of RBC Investor Services and its center of excellence in Malaysia. The services involved are custody, foreign exchange, fund administration, transfer agency, middle office and securities lending and borrowing.
With this operation, Caceis will become a European giant and one of the world leaders in fund services. From then on, Caceis will expand its customer base, while offering an enhanced range of products. As explained by Jean-François Abadie, CEO of Caceis: “This merger with RBC Investor Services allows us to consolidate our position as a leading European player in Asset Servicing.” He continues: “We are strengthening our leadership in a range of services, strengthening our position in a number of key markets, developing our relationships with global asset managers and increasing our capabilities and scale.”
We are strengthening our leadership in a range of services, strengthening our position in a number of key markets, developing our relationships with global asset managers and increasing our capabilities and scale.
Through this transaction, Caceis, a subsidiary of Crédit Agricole SA and Santander, acquires a European leader in fund services. In the European market, RBC Investor Services has approximately €1 trillion in assets under administration and nearly €500 billion in assets under custody. Such volumes have placed RBC Investor Services on the list of banks directly supervised by the European Central Bank (ECB), including five in Luxembourg.
A strategic retirement for RBC
Upon completion of the transaction, Caceis will have €3.5 billion in assets under administration and €4.8 billion in 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.
Although a memorandum of understanding has been signed, the completion of the operation is not expected before the end of the third quarter of 2023. Of course, the completion of the operation remains subject to the prior consultation of the representative bodies of the Caceis staff and all required regulatory approvals.
This allows us to focus on our Canadian asset servicing franchise in our home market.
For its part, the Royal Bank of Canada has given reasons to leave the European market to strengthen its position in the Canadian market. “This allows us to focus on our Canadian asset servicing franchise in our home market,” said Francis Jackson, managing director of RBC Investor Services.
On the other hand, there may be some concern among Luxembourg employees of RBC Investor Services. On March 31, 2021, the unions and the bank’s management reached an agreement on a social plan covering 241 positions. It was already the third social plan. Nonetheless, the CEO of RBC Investor Services explained, “We are confident that this proposed transaction will bring benefits to our clients and our employees.” The CEO of Caceis added that “RBC Investor Services teams will bring their expertise in the service needs of international investor clients and distribution services”.
We are confident that this proposed transaction will bring benefits to our customers and our employees.
RBC Investor Services was previously a key European player in fund services, 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, the Royal Bank of Canada finally announced the purchase of the shares of BIL (formerly Dexia Banque Internationale à Luxembourg), which owned half of the structure. The price of BIL’s stake in RBC Dexia Investor Services amounts to €837.5 million.
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 Europe and the Asia-Pacific (APAC) region, the Luxembourg presence of Caceis is represented by a branch of Caceis Bank registered in France. Around 1,200 employees work for Caceis in Luxembourg.
This story was first published in French on Paperjam. It was translated and edited for Delano.