Royal Bank of Canada (RY.TO) announced another preferred share offering on Tuesday to bolster its capital ratio, the latest in a string of offerings by Canada's big banks to shore up balance sheets as the economy slides.
Royal Bank's C$200 million ($162 million) offer is for 8 million noncumulative five-year rate reset preferred shares, at a price of C$25 each. Underwriters will have an option to buy an additional 3 million shares at the offering price.
The offering comes just a month after Royal Bank, Canada's largest bank by market capitalization, announced a C$400 million preferred share offering -- a sign that the appetite for such offerings from the nation's still-profitable banks remains healthy.
All of Canada's Big Six banks have launched preferred share or note offerings this year.
While the country's banking system has been ranked as the world's soundest and has comparatively strong capital ratios, management teams are taking no chances, given the intensity of the global financial crisis.
"We routinely undertake funding transactions to maintain strong capital ratios and a cost effective capital structure. Net proceeds from this transaction will be used for general business purposes," Royal Bank said in a statement.
Royal reported in February that it had a Tier 1 capital ratio of 10.6 percent at the close of its first quarter, ended Jan. 31.
The latest offering will be led by Royal's own RBC Capital Markets unit and is expected to close on April 29.
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