'Buyer beware': RBC CFO warns short sellers
The Royal Bank of Canada’s chief financial officer is not buying the short calls on Canadian financial institutions.
“It would be ‘buyer beware’ for those who look to short our stock,” RBC CFO Rod Bolger told BNN Bloomberg in a Thursday interview.
“When you look at a three-, five-, 10-, even a 15-year basis – including the financial crisis – RBC total shareholder return is double-digits in all of those timeframes,” he added. “If you add on our four-per-cent dividend yield that provides a nice healthy buffer for those who are long our stock.”
Canada’s banks have been the subject of short-selling speculation for the last two months after famous portfolio manager Steve Eisman sounded the alarm on the institutions’ preparedness for a dip in the credit cycle.
Bolger said Thursday that the bank is prepared for a potential downturn and that RBC continues to take on and underwrite new clients throughout the credit cycle.
“We don’t see it right now. We don’t see those dark storm clouds on the horizon yet,” he said.
“But, if we do see them, we’re ready.”
Bolger pointed to recent stress tests conducted by the International Monetary Fund as evidence the bank is doing its due diligence to be prepared for the worst. The IMF even praised the banks’ “resilience” in the face of the tests.
“The stress tests that they put us through are quite severe and we put ourselves through extremely severe stress tests all the time,” he said.