Analysts call it a war chest win while critics see another Canadian asset heading south
RBC and BMO stand to book more than $1bn in combined after-tax gains by selling Moneris, the payments processor they built together a quarter-century ago, in a move analysts read as the banks cashing out of an asset they no longer treat as core.
Royal Bank of Canada and Bank of Montreal agreed on Monday to sell the jointly owned business to US private equity firm Francisco Partners in a deal valued at $2bn, according to Reuters, with each bank taking half the proceeds.
RBC expects an after-tax gain of about $475m on closing, and BMO expects roughly $600m, Bloomberg reported, citing the banks.
BMO said the sale will lift its regulatory capital ratio by about 15 basis points, while RBC described the effect on its own ratio as marginally positive.
Analysts framed the exit as capital discipline rather than retreat.
The transaction is "incrementally positive for both banks," Canaccord Genuity Corp analyst Matthew Lee wrote in a Monday note reported by Financial Post.
He said it frees capital from a non-core asset and matches a broader trend of banks simplifying their balance sheets to redeploy capital.
That trend is the deeper reason the venture went up for sale.
As per Reuters, many lenders have shed payments businesses because the fast pace of digitization forces steady capital spending to stay competitive.
Toronto-Dominion Bank moved part of its merchant-processing operations to Fiserv last year, Bloomberg noted, and US lenders including Bank of America, Fifth Third and PNC Financial Services have also pulled back from payments processing.
Reuters first reported that RBC and BMO were weighing a Moneris sale about a year ago, at a valuation near $2bn that held up almost exactly once the deal closed.
Both banks are keeping a foot in the business.
RBC said the two lenders will enter exclusive, long-term customer referral arrangements with Moneris, preserving distribution even after handing over ownership.
Moneris president and chief executive James Hicks tied that structure to the banks' continued backing, saying in the companies' statement that their relationships with the processor "extend well beyond ownership."
For portfolio watchers, the sale lands with both banks near multi-year highs.
RBC's Toronto-listed stock has climbed nearly 26 percent this year for a market value of about $408bn, and BMO has gained 42 percent to roughly $177.6bn, Reuters reported, citing LSEG data.
The agreement was announced after markets closed on Monday, and analysts carry a buy consensus on RBC and a hold on BMO.
BMO reports earnings later this month and RBC on 27 August, occasions likely to draw questions on how each bank deploys the proceeds.
Not all of the response was favourable.
The transfer of a homegrown payments champion to US hands drew pushback over foreign ownership of Canadian technology, Global News reported, coming days after chipmaker AMD moved to buy semiconductor firm Taalas and months after public figures urged Prime Minister Mark Carney to defend the country's digital sovereignty.
Concordia University economist Moshe Lander called the Moneris sale a symptom of that dependence.
"It's a headline grabber. It's a financial product and it's one of those signs that we're still really tied at the hip to the US," Lander told Global News.
He tempered the alarm, though, arguing that Canada runs a net foreign-asset surplus and that any owner "still has to submit to Canadian law rules and regulations."
That surprise registered on social platforms too, where users flagged the deal as another Canadian tech asset passing to American control, as reported by The Deep Dive.
Industry observers were cautiously optimistic on the outcome for Moneris itself.
"It's hard to say if this purchase will make Moneris more competitive, that will play out as [Francisco Partners] takes on governance," Cliff Gray, principal at Gray Consulting, said in an email to Digital Transactions.
Gray added that the deal "cements the ongoing value of Moneris, given [Francisco Partners] is willing to make a multi-billion dollar bet on them."
Francisco Partners, for its part, said it intends to keep the business Canadian, with partner Peter Christodoulo pledging to preserve "the deeply Canadian identity that has made Moneris a market leader."
Moneris, founded in 2000 and handling about one-third of Canadian transactions across 325,000 points of commerce, will take on Jeff Sloan, former chief executive of Global Payments Inc., as chairman once the sale completes.
The deal is expected to close by the end of the banks' fiscal first quarter in 2027, or January, pending clearance under the Retail Payment Activities Act and the Competition Act.
