RBC Has ‘Shot’ at Being Systemically Important in Basel Rule, Analyst Says

Royal Bank of Canada (RY) is the only Canadian lender with a “reasonable shot” at being classified as “globally systemically important” by the Basel Committee on Banking Supervision, Canaccord Genuity analyst Mario Mendonca said.

The committee has called for increases in bank capital as governments aim to prevent the need for new taxpayer-funded bailouts. Lenders deemed too big to fail, or “systemically important” will be required to hold as much as 2.5 percentage points in additional capital, the Basel Committee said June 25.

If Canada’s largest bank by assets is classified as such, it would be near the bottom of the 1 percent to 2.5 percent range, Mendonca wrote today in a note to clients.

The analyst also said that Canada’s banking regulator would be unlikely to treat Toronto-based Royal Bank differently than the country’s other five main lenders.

Tanis Robinson, a spokeswoman at Royal Bank, didn’t immediately return a phone call seeking comment.

To contact the reporter on this story: Sean B. Pasternak in Toronto at spasternak@bloomberg.net.

To contact the editors responsible for this story: David Scanlan at dscanlan@bloomberg.net; David Scheer at dscheer@bloomberg.net.

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