Fidelity Bank & Trust International and Royal Bank of Canada (RBC) are to establish an investment banking joint venture in the Caribbean.
Under the agreement, which is subject to regulatory approval, RBC will acquire a 50% interest in Fidelity's wholly owned Bahamas-based subsidiary, Fidelity Merchant Bank & Trust.
The joint venture will be called Royal Fidelity Merchant Bank & Trust and will provide corporate finance and advisory, investment management, stock brokerage, share registrar and transfer agency, pension and mutual fund administration services to existing and new clients throughout the Caribbean.
RBC will transfer its Barbados investment management and trust business to a Barbados subsidiary of Royal Fidelity on receiving local approvals and licences.
Upon closing, Royal Fidelity will operate in The Bahamas and Barbados with assets under management and administration in excess of US$1 billion, with plans to open offices elsewhere in the Caribbean.
Michael Anderson, the president of Fidelity Merchant Bank & Trust, will be president of Royal Fidelity.
Both RBC and Fidelity will continue to operate their current retail banking and other businesses in the region under their respective brands.
Anwer Sunderji, the chairman and CEO of Fidelity, said: "This transaction validates our strategy in deploying resources to build our merchant bank subsidiary, which has established itself as the leading investment advisor and wealth management institution in The Bahamas.
"Innovative products, solid advice and unparalleled service have been key to Fidelity's success. Through this transforming partnership with Royal Bank of Canada, Royal Fidelity will gain access to significant financial and technical resources that will enable it to grow rapidly within and outside The Bahamas."
Ross McDonald, RBC's head of Caribbean banking, said the venture would extend RBC's financial services platform in the region, giving it even greater access to the investment banking and corporate advisory sector.
"We are impressed with Fidelity's merchant banking operations and view this transaction to be strategically important to our expansion plans in the Caribbean," he said.
Royal Fidelity will be well positioned to take advantage of the growing number of investment and financing opportunities arising across the Caribbean, said Anderson.
"The Bahamas, Jamaica, Trinidad and Barbados have been centres of several large mergers, acquisitions and related capital markets transactions in recent months and the expectations are that this trend will continue," he said.
The combination of RBC and Fidelity will establish a one-stop solution for medium to large-sized corporate finance engagements.
Royal Fidelity clients will be able to obtain corporate finance services as well as corporate banking products, such as bridge loans, project finance and term loans, along with wealth management and fiduciary services.
"Clients of the new Royal Fidelity joint venture will benefit from RBC's financial strength and extensive experience and capabilities in global capital markets and Fidelity's innovative corporate finance and successful wealth management experience," Anderson added.