Do the recent events at Dexia have any impact on how they safekeep assets in Canada?

Do the recent events at Dexia have any impact on how they safekeep assets in Canada?

This week, Dexia SA, the Belgian bank, made headline news over its need for a government bailout as a result of its weakened financial state. Dexia SA, the bank, should not be confused with RBC Dexia Investor Services, the custodian. RBC Dexia Investor Services (RBC Dexia) is a joint venture partnership between RBC and Dexia SA. Investors who use RBC Dexia as their custodian should not fear the safety and security of their assets. The joint venture is profitable and a stand-alone entity from Dexia SA and RBC.

“Dexia’s position has no impact on RBC Dexia or its operations,” RBC said in a statement. “RBC Dexia’s shareholder agreement is structured to prevent conditions at either parent company from impairing RBC Dexia’s ability to operate as a strong, independent company.”

Dexia SA’s recent troubles may cause them to sell their share of RBC Dexia Investor Services in order to raise cash to repay the government guarantees. RBC has a right of first refusal on the purchase of Dexia’s share of the custodian and, according to recent news reports, are currently in talks with Dexia SA about purchasing the remaining 50% of RBC Dexia Investor Services they do not already own. RBC may eventually own 100% of the custodian but custodian clients should be unaffected.

The article is not intended to provide advice, recommendations or offers to buy or sell any product or service. The information provided in this report is compiled from our own research and is based on assumptions that we believe to be reasonable and accurate at the time the report was written, but is subject to change without notice.