RBC to acquire RBTT

Royal Bank of Canada (RY on the TSX and NYSE) and the RBTT Financial Group (RBTT) today jointly announced an agreement to combine RBC’s Caribbean retail banking operations with RBTT’s through the acquisition of RBTT for a total purchase price of TT$13.8 billion (approximately US$2.2 billion at exchange rates as of September 28, 2007).

Under the agreement, RBTT shareholders will receive per share consideration of TT$40 (approximately US$6.33 as at September 28 exchange rates) payable in a combination of cash (60%) and RBC common shares (40%). The number of RBC common shares received by RBTT shareholders is subject to a plus/minus 10% “collar” based on an RBC share price of US$54.42 (the average trading price for the five days ending September 28). Further details about the collar mechanism are available below.

The RBTT Board of Directors approved the deal and unanimously recommends that RBTT shareholders vote in favour of the transaction. The transaction will be mutually beneficial for both companies. It is expected to close by the middle of 2008 and will be accretive to RBC’s earnings per share in 2008. RBC’s offer represents an 18% premium on the closing price of RBTT shares on September 28, 2007, and a 27% premium to the average share price of TT$31.44 over the last 12 months.

The transaction will create one of the most expansive banking networks in the Caribbean, with a presence in 18 countries and territories across the region. With more than US$13.7 billion in assets, the combined operations will have 130 branches across the Caribbean, with more than 6900 employees serving more than 1.6 million clients. RBC’s expanded Caribbean retail banking operations will ultimately be headquartered in Trinidad and Tobago.

“This is a transformational acquisition for RBC in the Caribbean, one that extends our reach into many important markets, notably Trinidad and Tobago, Jamaica, and the Dutch Caribbean,” said Peter Armenio, RBC’s head of U.S. & International Banking. "RBTT provides RBC with extensive local insight and leadership in markets where we have little or no presence while significantly advancing our strategy to grow outside Canada.

“RBTT is a perfect complement to RBC’s current footprint,” Armenio added. “We both share a history of serving customers throughout the Caribbean and have almost no overlap of our respective branch networks.”

“This historic transaction provides a great opportunity for both companies” said Peter July, RBTT Group Chairman. "RBC’s financial strength and depth of expertise combined with RBTT’s market knowledge and position in the region provides the perfect foundation for us to continue growing and competing effectively within the Caribbean Basin and beyond.

“RBTT shareholders will benefit by having the opportunity to improve significantly the liquidity of their investment and own a portion of the largest bank in Canada and a leading global financial services institution,” July added.

“The benefits of this transaction also go well beyond the shareholders and employees of both companies,” July added. “This transaction sets the stage for Trinidad and Tobago becoming the financial center of the Caribbean.”

The headquarters of RBC’s Caribbean retail banking operations will be located in Port of Spain. “We want our Caribbean headquarters to be located in what is a key financial center for the region as well as a logical jumping off place for potential growth outside the Caribbean,” Armenio said.

Senior management from both organizations will be integrated. Suresh Sookoo, RBTT Group CEO and Ross McDonald, RBC’s current head of Caribbean banking, will share responsibility for leading a smooth transition. Sookoo will become CEO of RBC’s Caribbean retail banking operations following the successful integration of the two operations.

“We are excited about the opportunities the transaction provides clients and employees of both companies,” McDonald said.

“This deal creates a significantly larger organization that is better positioned to serve all our customers, who will benefit from the expanded market coverage, the increased lending capacity of the combined banks and an expanded range of products,” Sookoo added.

The acquisition marks RBC’s return to Trinidad and Tobago, where it had maintained operations from 1902 to 1987. As a consequence of this proposed transaction, RBC will explore the possibility of issuing depositary receipts backed by RBC common shares on the Trinidad and Tobago Stock Exchange. “Making depositary receipts available in Trinidad and Tobago would further demonstrate our commitment to the region while giving local investors a chance to invest in the growth of one of the best performing financial services companies in the world,” Armenio said.

RBTT is RBC’s second international acquisition in the past month and the ninth acquisition RBC has announced outside Canada in the past 12 months. “We are committed to growing our business outside Canada and we will continue pursuing suitable opportunities to build on our existing businesses through organic means as well as acquisitions,” Armenio said.

The deal is subject to closing conditions, including approval by regulators and RBTT shareholders, and other conditions described in the information circular to be mailed to RBTT shareholders.


DEFINITION OF COLLAR MECHANISM
Under the terms of the agreement, RBTT’s shareholders will receive a fixed amount of cash and a number of RBC common shares for their RBTT shares. The number of RBC common shares to be received for each RBTT share will be determined by an exchange ratio. This exchange ratio will be determined by dividing the U.S. dollar equivalent of TT$16 by a specified price as follows:

If the average trading price of RBC common shares on the NYSE for the five consecutive trading days ending on the second trading day prior to the closing of the transaction is between US$48.98 and US$59.86, then the specified price for determining the exchange ratio will be that average RBC trading price.


If that average RBC trading price is equal to or greater than US$59.86, then the specified price for determining the exchange ratio will be US$59.86.


If that average RBC trading price is less than or equal to US$48.98, then the specified price for determining the exchange ratio will be US$48.98.
A conference call is scheduled to take place on October 2, 2007, from 10 a.m. to 10:30 a.m. (EDT) and will feature a presentation by Royal Bank of Canada and RBTT executives on this announcement. It will be followed by a question and answer period with analysts. Interested parties can access this call live on a listen-only basis via telephone at: 416-340-2216 or 1-866-898-9626. Please call between 9:50 a.m. and 9:55 a.m. (EDT).

A recording of the conference call will be available after 5:00 p.m. (EDT) on October 2 until December 28 via telephone at: 416-695-5800 or 1-800-408-3053, passcode 3238335#.
Information related to this announcement will be available at: www.rbc.com/investorrelations.

ABOUT RBTT
RBTT is a Caribbean-owned banking and financial services group which offers a complete range of banking and financial intermediation services to customers in Trinidad & Tobago and the Caribbean.

The RBTT Financial Group includes ten commercial banks with branches located throughout the English-speaking Caribbean, Suriname, the Netherlands Antilles and Aruba. RBTT has led in pioneering a comprehensive range of innovative and creative financial services for individual clients, private and public sector companies, governments and international investors. These include a full range of local and international credit cards, sophisticated international financing packages, trade promotion services and interactive trade financing initiatives.