Side-by-side credit pricing comparison from Pillar 3 disclosures.
On a representative BBB+ EUR 25M 5-year term loan, Royal Bank of Canada is the cheaper lender by 22bp in minimum spread. For a EUR 25M facility, that's EUR 55,639 per year.
| Metric | Royal Bank of Canada Canada |
Scotiabank Canada |
|---|---|---|
| IRB approach | Mixed | Mixed |
| Cost-to-income | 43.0% | 54.5% |
| Effective tax rate | 21.0% | 27.5% |
| Avg corporate PD | 2.34% | 1.27% |
| Avg LGD unsecured | 37.0% | 36.6% |
| Avg LGD secured | 20.0% | 20.0% |
| Funding spread (bp) | 15bp | 15bp |
| Corporate EAD | EUR 464bn | EUR 284bn |
Both banks priced on the exact same deal — 150bp spread, 20bp commitment fee, 60-month maturity. Higher RAROC means the bank earns more from this deal. Lower min-spread means the borrower gets a better rate.
| Component | Royal Bank of Canada | Scotiabank |
|---|---|---|
| Annual revenue | EUR 385,000 | EUR 385,000 |
| Operating cost | EUR 154,000 | EUR 154,000 |
| Expected loss | EUR 28,750 | EUR 28,750 |
| Capital required (FPE) | EUR 2,451,320 | EUR 2,451,320 |
| RAROC (after tax) | 7.70% | 7.06% |
| Min spread for 12% RAROC | 239bp | 261bp |
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