Key Points
TORONTO, Sept 29 (Reuters) - Royal Bank of Canada (RBC) (RY.TO) on Friday said it had injected capital into its Los Angeles-based subsidiary City National to boost the unit's liquidity and pay down a higher cost of borrowing...
"An intercompany capital injection has been made into the City National subsidiary, further strengthening the capital and liquidity position of the subsidiary balance sheet, while also being used to pay down higher cost borrowing," RBC said in a statement...
"The need for such measures is a negative read-through on City National's health," Rizvanovic said.. RBC, Canada's biggest lender, said in the statement that recent intercompany sales of certain debt securities by City National will result in the recognition of realized losses at the unit, which will be "eliminated at the Royal Bank of Canada consolidated level."..
The bank said City National has reinvested most of the proceeds of this intercompany transaction in new securities for its liquidity and investment portfolio, which should benefit net interest margins.. RBC did not offer further comment beyond the statement...
Those losses materialized as "everything went against us this quarter," RBC CEO Dave McKay told analysts last month, largely arising from a credit loss on a real estate item, higher costs and rising deposit betas, which measure the sensitivity of a bank's deposit cost to changes in short-term interest rates...
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