A Profitable Business Venture For The Royal Bank Of Canada

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WILFRID LAURIER UNIVERSITY MBA Integrated Course Word Count: 2727 PERU: A PROFITABLE BUSINESS VENTURE FOR THE ROYAL BANK OF CANADA GOLD 5: Matthew Darcel - 090542810 Branavaa Devasenathipathy - 145817750 Suyi Ogbeifun - 135825930 Stephanie Ruediger - 135825590 Parvinder Singh - 145808870 October 5, 2014 TABLE OF CONTENTS 1. Executive Summary 3 2. The Macro Environment of Peru 4 3. The Banking and SME Industry 5 4. The Royal Bank of Canada 7 5. Alternative Market Entry Methods 7 6. Recommendation 8 7. Implementation and Long Term Forecasts 10 8. EXHIBIT 1 – GDP GROWTH RATE 11 9. EXHIBIT 2 – INFLATION RATE TREND 11 10. EXHIBIT 3 - SENSITIVITY AND NET INCOME FORECAST 12 11. EXHIBIT 4 – COMPARING MAJOR PERUVIAN COMPETITORS…show more content…
This reduces a large amount of risk by acquiring a portion of Banco Azteca del Peru as we obtain an established clientele, and will work with people who have significant experience and knowledge of the Peruvian market. Banco Azteca del Peru is rapidly trying to expand and could expand at a faster rate with our contributed capital from acquisition, they have healthy financial ratios which are appealing to us. However, they are currently not growing or are as profitable as the larger banks in Peru and could benefit from our expertise. In addition, by allowing RBC to focus on the SME area, Banco Azteca del Peru will be able to focus on other areas of the business such as the growing insurance market in Peru. In regards to the attractiveness of the financial ratios, Banco Azteca del Peru earned CD$4,500,000 in profit at the end of the 2nd quarter of 2014 and shareholders have invested CD$42,791,000 into the company. Our strategy for acquiring Banco Azteca del Peru is to propose a lucrative offer– CD$80,000,000 for a 51% share of the bank, and then we plan to invest additional capital to further train employees and grow the company. Based on the growing economy and our forecasted growth, we expect to earn CD$243,000,000 in profit in the next 20 years by entering the Peruvian market, and pay off our investment in 13.5 years. 2. THE MACRO ENVIRONMENT OF PERU The current government of Peru is characterized by a constitutional system of presidential democracy with a popular
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