The Royal Bank of Canada says it has reached a settlement in its dispute with Cooperative Centrale Raiffeisen Boerenleenbank, B.A., the large Dutch cooperative bank known as Rabobank. But the settlement will cost the Canadian bank $74 million against first-quarter earnings.

The 18-month-old dispute arose over Rabobank’s refusal to meet its payment obligation under a January 2001 US$517-million swap transaction linked to collapsed energy trader Enron Corp. RBC said the confidential settlement would result in a reduction to net income after tax of $74 million for the first quarter of 2004.

The legal tussle came after RBC lent the US$517-million to an Enron special-purpose trust in November, 2000, and soon after traded the risk in a swap transaction with Dutch financial group Rabobank.


The dispute between the two banks has been the subject of protracted litigation in London and New York since June 2002. Court approval of the settlement is not required in either New York or London.

“The settlement will allow us to put this matter behind us without the further expense and distraction of continued litigation,” Said Paul Wilson, a spokesman for RBC Capital Markets, the bank’s corporate and investment banking arm.