Royal Bank of Canada decided against spinning off its U.S. proprietary trading business into a hedge fund, leaving the lender to weigh alternatives to comply with looming banking regulations.
'We are actively working to restructure our proprietary trading business to comply with the Volcker Rule ahead of the July 2015 deadline,' Kevin Foster, a spokesman for Toronto-based Royal Bank, said in an e-mailed statement. 'A spin-out of GAT in its current form will not proceed,' he said, referring to the Global Arbitrage and Trading unit.
Bloomberg News reports that the Royal Bank had considered investing as much as $1 billion in a hedge fund created from the New York-based unit, Bloomberg News reported in May. The plan faced resistance from the Federal Reserve, two people with knowledge of the matter said Wednesday.
The fund, Taursa Capital Partners, was expected to open by year-end, said the people, who asked not to be named because the plans were private and subject to regulatory approval.
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