By NEIL HARTNELL
Tribune Business Editor
More banking jobs are set to be lost after Royal Bank of Canada (RBC) confirmed over the weekend that it plans to close its Paradise Island branch on October 17, part of a continuing consolidation strategy designed to reduce costs and boost efficiency.
The bank, in a statement, said the Paradise Island branch’s operations will be consolidated with its main branch on Bay Street as it moves to “reconfigure” its Bahamian branch network
“Like all businesses, we constantly evaluate our operations to ensure we continue to match our service capabilities with the needs of our customers,” said Nathaniel Beneby, Royal Bank’s managing director for the Bahamas, Cayman and Turks & Caicos Islands.
“These decisions are part of RBC’s strategy to better serve our clients, while operating more efficiently. We are fully committed to ensuring a smooth, uninterrupted transfer of our customers’ bank accounts.”
He added: “We believe this consolidation of the Paradise Island Branch with main branch Bay Street will support the long-term sustainability of our operations in the Bahamas.”
Royal Bank’s statement did not give numbers, but conceded that the Paradise Island branch’s closure would result in “some redundancies”.
It suggested that some staff would be found positions elsewhere within the bank’s operations. Tribune Business understands that Paradise Island branch staff were informed of the bank’s plans on Wednesday last week.
The Paradise Island move is the second such step announced by Royal Bank this year, as it bids to rebound to historical profit levels in an environment where commercial banks’ top and bottom lines have been impacted by high non-performing loan levels and associated provisioning.
Royal Bank disclosed back in April that its BISX-listed mortgage lending arm, FINCO, would close its Bahamas Financial Centre-based branch in September this year, with all operations transferred to the main Bay Street branch. The Paradise Island branch is thus taking a similar route.
Yet Royal Bank’s decision also represents a ‘double whammy’ for the BISX-listed Bahamas Property Fund and its Bahamian public shareholders.
For it is now vacating a second property owned by the Fund. While the Paradise Island branch is located in its One Marina Drive property, the FINCO branch also set to close is based in its flagship Bahamas Financial Centre property.
Michael Anderson, the Bahamas Property Fund’s administrator, told Tribune Business that the Royal Bank branch’s closure would increase vacant space at One Marina Drive by between 10-15 per cent.
Given a current vacancy level of 20 per cent, he predicted that the branch closure could take this to between 30-35 per cent - matching the current vacancy level at the Bahamas Financial Centre.
But, on the positive side, Mr Anderson said the branch location’s characteristics - ground level and 3,000 square feet - would suit the increasing number of potential retail tenants eyeing space at One Marina Drive.
The first the RoyalFidelity president heard of Royal Bank’s closure plans came when he was contacted by Tribune Business on Friday, after this newspaper had been tipped to the move.
Royal Bank issued its press release on Saturday, suggesting that it was prompted to make a public statement after Tribune Business made phone and e-mail inquiries about the impending closure.
But, with Royal Bank holding a 50 per cent stake in RoyalFidelity, the Property Fund’s administrator, it seems odd that the latter was not informed in advance of the closure plans.
“It’s obviously not great when you lose a tenant,” Mr Anderson told Tribune Business, adding that Royal Bank’s 3,000 square feet accounted for between 10-15 per cent of the approximately 22,000-23,000 square feet total at One Marina Drive.
“If you consider 20 per cent vacancy there currently, that puts us in the same range as the Financial Centre,” he added yesterday.
“There’s no doubt it’s a blow, but it’s not an insurmountable blow. It’s a reasonable amount of rental income lost, and we have to figure out how to lease the space.”
The Bahamas Property Fund now has a six-month window in which to secure another tenant, as Royal Bank’s base lease does not expire until April 2015.
“It could be an opportunity,” Mr Anderson said. “We have started to see an increase in demand for retail space, ground floor retail space. What RBC is in now, it’s an area where we’ve seen demand for space.
“Two years ago it would have been a different situation. While it’s not great, at least we are seeing more interest in terms of renting space.”
Royal Bank’s Paradise Island branch will have largely drawn its customer base from staff at Atlantis and the other hotels, chiefly the the RIU and now-closed Paradise Island Harbour Resort, plus residents on the island.
They will lose the convenience of having the branch ‘on their doorstep’, and will have to visit the ‘mainland’ to conduct branch banking business. And Royal Bank’s main branch is not in an area endowed with parking.
Still, to ease the transition Royal Bank will maintain an ABM machine on Paradise Island for an extended period. It is also allowing customers to choose which branch their account is relocated to.