Royal Bank of Canada RY and BMO Financial Group BMO announced on Aug. 10 that they have agreed to sell jointly owned payment processing business Moneris Solutions to Francisco Partners, a private equity firm, for cash consideration of approximately C$2 billion.
Why it matters: Payment processing is a scale-driven business, and most US regional banks have exited the space. In addition, RBC’s and BMO’s Canadian peer, Toronto-Dominion, sold a portion of its Canadian merchant processing business to Fiserv in 2025. Stock price reactions were muted for RBC and BMO after the market opened Aug. 11.
- Moneris was a joint venture formed by RBC and BMO in 2000, focusing on the Canadian payment processing business. Reuters reported in August 2025 that RBC and BMO were in the early stages of exploring the sale of Moneris as a whole or retaining part of it.
The bottom line: As we incorporate the deal news, we will maintain our fair value estimates for wide-moat-rated RBC and narrow-moat-rated BMO. We assess both banks’ shares as overvalued.
Coming up: RBC and BMO each own around 50% of Moneris. The deal is pending regulatory approvals and is expected to close by the end of the first quarter of fiscal 2027.
- RBC expects to record a gain on sale of around C$475 million after tax. It expects the sale to be marginally positive to its common equity Tier 1 ratio and not to have a significant impact on future earnings.
- BMO is set to report its fiscal third-quarter results on Aug. 25, while RBC will report on Aug. 27. We expect to hear further management commentary on plans to redeploy proceeds.
