Royal Bank of Canada (RY), the lender that said yesterday it’s closing its European government-bond business, was cut from a list of dealers that are able to trade directly with the Netherlands’ debt office.
The Toronto-based bank was absent from an updated list of primary dealers received today from the Dutch State Treasury Agency, which sells bonds on the government’s behalf. The decision was made by RBC, according to Peter Nijsse, the head of cash management, issuance and trading at the Dutch debt office. He declined to comment further on the matter. Louisa Fairman, a spokeswoman for RBC in London, declined to comment beyond what the lender said yesterday.
Banks are scaling back in product areas in which they aren’t leaders, Greenwich Associates said in an annual survey of U.S. investors published yesterday. Banks including Morgan Stanley and UBS AG are disposing of assets in fixed-income trading and seeking to cut costs amid sluggish revenue growth.
“It’s a very competitive market, and unless you have a large market share it’s a difficult market in which to make money,” said Chris Wheeler, a bank analyst at Mediobanca SpA in London. “Some banks may have looked at this business in the light of capital requirements and thin margins and taken a sanguine view that it’s something they don’t have to do.”
RBC remains on the list of gilt-edged market makers in the U.K. as of today, according to Sarah Ellis, a spokeswoman at the Debt Management Office in London. It’s still part of Germany’s auction group, according to data on the Bundesbank’s website.
By exiting European government-bond trading, RBC is making a “tactical adjustment” in its product offering, Gillian McArdle, a spokeswoman for RBC Capital Markets, said in an e-mailed statement yesterday.
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