RBC expects to manage transition to Basel III capital rules
without use of regulatory event redemption clause
TORONTO, February 7, 2011— Royal Bank of
Canada (RBC) (RY on TSX and NYSE) today announced that it
expects to manage its transition to Basel III capital rules
without making use of the regulatory event redemption clause
to redeem capital instruments.
As a result of changes to the qualifying criteria for capital
under the guidelines published by the Basel Committee on Banking
Supervision (BCBS) on December 16, 2010 and January 13, 2011
and subsequent OSFI guidance regarding the treatment of non-qualifying
capital instruments published on February 4, 2011, certain
capital instruments may no longer qualify as capital beginning
January 1, 2013. RBC's non-common capital instruments will
be considered non-qualifying capital instruments under Basel
III and will therefore be subject to a 10 per cent phase-out
per year beginning in 2013. These non-common capital instruments
include preferred shares, trust capital securities and subordinated
debentures.
The regulatory event redemption clause applies to RBC's innovative
tier 1 capital instruments (RBC trust capital securities).
Based on current analysis, RBC does not intend to invoke the
clause to effect early redemption of these instruments.
RBC maintains the right to redeem capital instruments based
on other existing terms and conditions not linked to regulatory
event clauses. RBC also retains the right to invoke any applicable
regulatory event redemption clause in accordance with its
terms should circumstances change.
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For further information, please contact:
Investor contact:
Karen McCarthy, Toronto, (416) 955-7809,
karen.mccarthy@rbc.com
Media contact:
Gillian McArdle, Toronto, (416) 974-5506
or toll-free 1-888-880-2173, gillian.mcardle@rbc.com
CAUTION REGARDING FORWARD-LOOKING STATEMENTS
Certain statements contained in this press release may be
deemed to be forward-looking statements under certain securities
laws, including the "safe harbour" provisions of
the United States Private Securities Litigation Reform Act
of 1995 and in any applicable Canadian securities legislation,
and Royal Bank of Canada (RBC) intends that such forward-looking
statements be subject to the safe-harbour created thereby.
These forward-looking statements include, but are not limited
to, statements with respect to RBC's transition to Basel III
capital rules. Forward-looking statements are typically identified
by words such as "believe", "expect",
"foresee", "forecast", "anticipate",
"intend", "estimate", "goal",
"plan" and "project" and similar expressions
of future or conditional verbs such as "will", "may",
"should", "could", or "would".
By their very nature, forward-looking
statements require us to make assumptions and are subject
to inherent risks and uncertainties, which give rise to the
possibility that our predictions, forecasts, projections,
expectations or conclusions and other forward-looking information,
including statements about the transition to Basel III capital
rules by RBC, will not prove to be accurate or that our assumptions
may not be correct. We caution readers not to place undue
reliance on these statements as a number of important factors
could cause our actual results to differ materially from the
expectations expressed in such forward-looking statements.
These factors include, but are not limited to, credit, market,
operational, and liquidity and funding risks, the impact of
changes in laws and regulations, changes to and new interpretations
of risk-based capital guidelines, and other factors that may
affect future results of RBC. We caution that the foregoing
list of important factors is not exhaustive. Additional information
about these and other factors can be found in our 2010 Annual
Report.
Except as required by law, RBC assumes no obligation to update
the forward-looking statements contained in this press release.
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