Florida International University - FIN 4634 Royal Bank of Canada Case (answered) / FIN 4634 case study.

1. What were RBC’s ultimate goals in opening a representative office in Thailand? In the first few years of 1980’s, RBC had to close its only representative office in Bangkok due to political and economic problems present in the country at the time. Despite this fact, about a decade later Royal Bank of Canada was granted a Bangkok International Banking Facility license, giving RBC a whole new opportunity to grow in Thailand. Not only, RBC firmly believed that Thai financial market had a great potential and a high probability of growth, but also, they knew the market represented a building block to successfully grow its commodity trade finance business, service multinationals and generate solid returns from trading activities. They were aware it was not going to be an easy task, but they knew that opening an office in an emerging market, such as Asia, was going to require perseverance and patience. RBC was going to put all its effort towards the accomplishment of their ultimate objective, a full branch license to function in Thailand. 2. How large is the initial staff for the office and what is the estimated pretax profit? Initially, the new office staff was intended to have 5 employees, 4 of them being local professionals in the areas of account management, credit and analysis skills. The remaining person would be an experienced banker that was already part of the bank network. In the first few years, the plans were to hire and train in Canada some university graduates from Thailand, and once their training was finished return them to Thailand to start working. The pretax profit was estimated to be $ 595,000 for the first year of operations and a really optimistic amount of $1,550, 000 for year 5. 3. What are RBC’s four major business lines in its Asia Pacific network? Royal Bank of Canada was the first North American bank that started doing business with China after the revolution in the early 1950’s. It now had hundreds of employees across Asia, with a network comprised of 10 offices around the globe. After consolidating its dominant position in Canada, RBC was ready to employ an aggressive strategy to serve the needs of the many businesses and individuals in the region. Among the many financial products offered by RBC there were four major business lines the institution was focused on: treasury services, financial institutions and trade, multinational lending, and global private banking. 4. What are the limitations of BIBF licenses?