Uncertainty over ongoing Nafta negotiations is creating angst among Royal Bank of Canada’s business clients even as markets appear to shrug off the risks, Chief Executive Officer David McKay said.
“Some of our commercial customers remain concerned about it,” McKay said Friday during the bank’s quarterly earnings call. “It’s certainly impacting longer-term investment decisions that we see customers making.”
McKay, heads of the country’s second-largest lender by assets, said the North American Free Trade Agreement is “highly beneficial” for the U.S. and Canada, and he “remains hopeful” the two countries and Mexico can reach a positive outcome to the talks, which resume next week.
McKay said there’s a “reasonable probability” that the 180-day notice to withdraw from the pact will be invoked.
“At that point, I still think there’s a good runway to negotiate this and I still think the markets will largely anticipate a good outcome and look through that,” he said. “But you’ll see some volatility through this process.”
In the meantime, “customers who have to make long-term investments are obviously hedging and thinking twice about it and we all hope this gets resolved in the near term.”
