It wasn’t an especially good day for bank stock Royal Bank of Canada (TSE:RY) today, as some distressing news emerged that should have sent the stock on a decline. However, despite the trouble afoot, Royal Bank eased up fractionally in Tuesday afternoon’s trading, proving investors still believe in the bank overall.
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First came trouble about the “cleantech” concept and why Royal Bank isn’t making more moves to finance it. Reports noted that the biggest lenders in Canada weren’t exactly leading the way in driving investment into smaller tech firms that could use some financial help getting off the ground.
The reasons were simple and likely served as a breath of fresh air to investors: most cleantech just isn’t that great an investment, and banks need to be focused on loans and investments that are most likely to pay off. Royal Bank’s cleantech lead, Peter McArthur, noted that Canadian banks have investing expertise, though it’s mostly focused on “…established businesses and technologies.”
Then, the Government Got Involved
Royal Bank’s faltering on cleantech investing was one thing, but then FINTRAC got involved. FINTRAC is Canada’s anti-money laundering agency, and it leveled a $7.5 million Canadian fine against Royal Bank over its failure to “..submit suspicious transaction reports.” Royal Bank noted that it wouldn’t appeal the decision but rather quietly pay up without incident.
Suspicious transaction reports are themselves somewhat of a controversial subject, particularly in the United States, where people who simply want access to their own money find themselves under increased scrutiny for reasons that are no one’s business but the account holder’s. This move may actually endear Royal Bank’s customers to it, as it can claim it’s standing up for customer privacy.
Is the Royal Bank of Canada a Buy or Sell?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on RY stock based on four Buys and four Holds assigned in the past three months, as indicated by the graphic below. After a 1.145% loss in its share price over the past year, the average RY price target of $98.26 per share implies 7.29% upside potential.
