Pricing Supplement
(To the Prospectus, the Prospectus Supplement and the Product Prospectus Supplement, each dated September 7, 2018)
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Filed Pursuant to Rule 424(b)(2)
Registration No. 333-227001
December 28, 2018
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Royal Bank of Canada
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$1,070,000
Capped Levered Market Plus Notes
Due July 1, 2020
Linked to the EURO STOXX® Banks Index
Senior Global Medium Term Notes, Series H
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The Notes are designed for investors who seek a return of 5.0 times the appreciation of the EURO STOXX® Banks Index (the “Index”), subject to the Maximum Return set
forth below. Investors should be willing to forgo interest and dividend payments and, if the level of the Index decreases, be willing to lose some or all of their principal.
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Senior unsecured obligations of Royal Bank of Canada maturing July 1, 2020.(a)
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Minimum denominations of $10,000 and integral multiples of $1,000 in excess thereof.
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The Notes priced on December 28, 2018 (the “pricing date”) and are expected to be issued on January 3, 2019 (the “issue date”).
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Key Terms
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Terms used in this pricing
supplement, but not defined herein, will have the meanings ascribed to them in the product prospectus supplement.
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Issuer:
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Royal Bank of Canada
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Reference Asset:
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EURO STOXX Banks Index (Bloomberg ticker symbol “SX7E”)
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Leverage Factor:
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5.0
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Payment at Maturity:
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If the Final Level is greater than or equal to the Initial Level, you will receive a cash payment that provides you with a
return equal to the Percentage Change multiplied by the Leverage Factor. Accordingly, if the Percentage Change is positive, your payment per $1,000 in principal amount of the Notes will be calculated as follows:
$1,000 + [$1,000 x (Percentage Change x Leverage Factor)]
However, the payment on the Notes will not exceed $1,711 for each $1,000 in
principal amount.
If the Final Level is less than the Initial Level, you will lose 1% of the principal amount of your Notes for every 1% that
the Final Level is less than the Initial Level. Accordingly, if the Percentage Change is negative, your payment per $1,000 in principal amount of the Notes will be calculated as follows:
$1,000 + [$1,000 x Percentage Change]
If the Final Level is less than the Initial Level, you will lose 1% of the
principal amount of your Notes for every 1% that the Percentage Change is less than 0%. Any payment on the Notes, including any repayment of principal, is subject to the creditworthiness of the Issuer and is not guaranteed by any third
party.
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Percentage Change:
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The performance of the Index from the Initial Level to the Final Level, calculated as follows:
Final Level – Initial Level
Initial Level
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Maximum Return:
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$1,711 per $1,000 in principal amount of the Notes.
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Initial Level:
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86.76, which was the closing level of the Index on the pricing date.
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Final Level:
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The arithmetic average of the closing levels of the Index on each of the valuation dates.
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Valuation Dates:
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June 22, 2020, June 23, 2020, June 24, 2020, June 25, 2020 and June 26, 2020(a)
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Maturity Date:
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July 1, 2020(a)
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Calculation Agent:
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RBC Capital Markets, LLC
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CUSIP/ISIN:
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78013XVF2 / US78013XVF22
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Estimated Value:
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The initial estimated value of the Notes as of the date of this document is $986.02 per $1,000 in principal amount, which
is less than the price to public. The actual value of the Notes at any time will reflect many factors, cannot be predicted with accuracy, and may be less than this amount.
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Price to Public1
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Underwriting Commission2
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Proceeds to Royal Bank of Canada
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Per Note
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$1,000
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$12.50
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$987.50
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Total
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$1,070,000
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$13,375
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$1,056,625
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Final Level
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Percentage Change
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Payment at
Maturity
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Total Return on the
Notes
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150.00
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50.00%
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$1,711.00
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71.10%
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140.00
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40.00%
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$1,711.00
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71.10%
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130.00
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30.00%
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$1,711.00
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71.10%
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120.00
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20.00%
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$1,711.00
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71.10%
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115.00
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15.00%
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$1,711.00
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71.10%
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114.22
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14.22%
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$1,711.00
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71.10%
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112.00
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12.00%
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$1,600.00
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60.00%
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110.00
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10.00%
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$1,500.00
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50.00%
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105.00
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5.00%
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$1,250.00
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25.00%
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102.50
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2.50%
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$1,125.00
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12.50%
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100.00
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0.00%
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$1,000.00
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0.00%
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90.00
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-10.00%
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$900.00
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-10.00%
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80.00
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-20.00%
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$800.00
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-20.00%
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70.00
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-30.00%
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$700.00
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-30.00%
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60.00
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-40.00%
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$600.00
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-40.00%
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50.00
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-50.00%
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$500.00
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-50.00%
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40.00
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-60.00%
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$400.00
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-60.00%
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30.00
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-70.00%
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$300.00
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-70.00%
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20.00
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-80.00%
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$200.00
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-80.00%
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10.00
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-90.00%
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$100.00
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-90.00%
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0.00
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-100.00%
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$0.00
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-100.00%
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Appreciation Potential — The Notes provide the opportunity to enhance index returns by multiplying a positive Percentage Change by the Leverage Factor, up to the Maximum Return.
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No Protection Against Loss — Payment at maturity of the
principal amount of the Notes is not protected against a decline in the Final Level as compared to the Initial Level. If the Final Level is less than the Initial Level, you will lose an amount equal to 1% of the principal amount of your
Notes for every 1% that the Percentage Change is less than 0%. Because the Notes are our senior unsecured obligations, payment of any amount at maturity is subject to our ability to pay our obligations as they become due and is not
guaranteed by any third party. For a description of the risks with respect to our credit, see “Selected Risk Considerations—Credit of Issuer” in this pricing supplement.
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Principal at Risk — Investors in the Notes could lose all or a substantial portion of their principal amount if the level of the Index decreases. If the Percentage Change is negative, the payment that you will receive at
maturity will represent a loss of 1% of your principal for each 1% that the Final Level is less than the Initial Level.
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The Notes Do Not Pay Interest and Your Return May Be Lower than the
Return on a Conventional Debt Security of Comparable Maturity — There will be no periodic interest payments on the Notes as there would be on a
conventional fixed-rate or floating-rate debt security having the same maturity. The return that you will receive on the Notes, which could be negative, may be less than the return you could earn on other investments. Even if your
return is positive, your return may be less than the return you would earn if you bought one of our conventional senior interest bearing debt securities.
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Your Potential Payment at Maturity Is Limited - The Notes will provide less opportunity to participate in the appreciation of the Index than an investment in a security linked to the Index providing full
participation in the appreciation, because the return on the Notes will not exceed the Maximum Return. Accordingly, your return on the Notes may be less than your return would be if you made an investment in a security directly linked
to the positive performance of the Index.
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Payments on the Notes Are Subject to Our Credit Risk, and Changes in
Our Credit Ratings Are Expected to Affect the Market Value of the Notes — The Notes are our senior unsecured debt securities. As a result, your receipt of
the amount due on the maturity date is dependent upon our ability to repay our obligations at that time. This will be the case even if the level of the Index increases after the pricing date. No assurance can be given as to what our
financial condition will be at the maturity of the Notes.
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There May Not Be an Active Trading Market for the Notes—Sales in the
Secondary Market May Result in Significant Losses — There may be little or no secondary market for the Notes. The Notes will not be listed on any
securities exchange. RBCCM and our other affiliates may make a market for the Notes; however, they are not required to do so. RBCCM or any other affiliate of ours may stop any market-making activities at any time. Even if a secondary
market for the Notes develops, it may not provide significant liquidity or trade at prices advantageous to you. We expect that transaction costs in any secondary market would be high. As a result, the difference between bid and asked
prices for your Notes in any secondary market could be substantial.
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You Will Not Have Any Rights to the Securities Included in the Index
— As a holder of the Notes, you will not have voting rights or rights to receive cash dividends or other distributions or other rights that holders of securities included in the Index would have.
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The Notes Are Subject to Non-U.S. Securities Markets Risks — An
investment in securities linked to the Index involves risks associated with the Eurozone. The prices of such securities may be affected by political, legal, economic, financial and social factors in the home country of each such company
and related international markets, including changes in governmental, economic and fiscal policies, currency exchange laws or other laws or restrictions, which could affect the value of the Notes. The foreign securities tracked by the
Index may have less liquidity and could be more volatile than many of the securities traded in U.S. or other longer-established securities markets. Direct or indirect government intervention to stabilize the relevant
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The Payments on the Notes Will Not Be Adjusted for Changes in Exchange
Rates Relative to the U.S. Dollar Even Though the Securities Comprising the Index Are Traded in Euros and the Notes Are Denominated in U.S. Dollars — Although the equity securities comprising the Index are traded in euros, and
the Notes are denominated in U.S. dollars, the amount payable on the Notes at maturity, if any, will not be adjusted for changes in the exchange rate between the U.S. dollar and the euro. Changes in exchange rates, however, may also
reflect changes in the applicable non-U.S. economies that in turn may affect the level of the Index, and therefore the Notes. The amount we pay in respect of the Notes on the maturity date, if any, will be determined solely in
accordance with the procedures described in this document.
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The Securities Comprising the Index Are Concentrated in One Sector
— All of the equity securities comprising the Index are issued by companies in the European financial services sector. As a result, the equity securities that will determine the return on the Notes are concentrated in one sector.
Although an investment in the Notes will not give holders any ownership or other direct interests in the equity securities comprising the Index, the return on the Notes will be subject to certain risks associated with a direct equity
investment in companies in the financial services sector. Accordingly, by investing in the Notes, you will not benefit from the diversification that could result from an investment linked to companies that operate in multiple sectors.
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Many Economic and Market Factors Will Impact the Value of the Notes — In addition to the level of the Index on any day, the value of the Notes will be affected by a number of economic and market factors that may either offset or
magnify each other, including:
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the expected volatility of the Index;
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the time to maturity of the Notes;
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the dividend rate on the securities included in the Index;
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interest and yield rates in the market generally;
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the U.S. dollar/euro exchange rate;
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a variety of economic, financial, political, regulatory or judicial events; and
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our creditworthiness, including actual or anticipated downgrades in our credit ratings.
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The Estimated Initial Value of the Notes Is Less than the Price to the
Public — The estimated initial value that is set forth in this pricing supplement does not represent a minimum price at which we, RBCCM or any of our
affiliates would be willing to purchase the Notes in any secondary market (if any exists) at any time. If you attempt to sell the Notes prior to maturity, their market value may be lower than the price you paid for them and the
estimated initial value. This is due to, among other things, changes in the level of the Index, the borrowing rate we pay to issue securities of this kind, and the inclusion in the price to the public of the underwriting discount and
the costs relating to our hedging of the Notes. These factors, together with various credit, market and economic factors over the term of the Notes, are expected to reduce the price at which you may be able to sell the Notes in any
secondary market and will affect the value of the Notes in complex and unpredictable ways. Assuming no change in market conditions or any other relevant factors, the price, if any, at which you may be able to sell your Notes prior to
maturity may be less than your original purchase price. The Notes are not designed to be short-term trading instruments. Accordingly, you should be able and willing to hold your Notes to maturity.
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The Estimated Initial Value of the Notes Is an Estimate Only,
Calculated as of the Pricing Date — The value of the Notes at any time after the pricing date will vary based on many factors, including changes in market conditions, and cannot be predicted with accuracy. As a result, the
actual value you would receive if you sold the Notes in any secondary market, if any, should be expected to differ materially from the estimated initial value of your Notes.
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We and Our Affiliates May Have Adverse Economic Interests to the
Holders of the Notes — We, RBCCM and our other respective affiliates trade the securities represented by the Index, and other financial instruments related to the Index, on a regular basis, for their accounts and for other
accounts under our or their management. We, RBCCM and our other affiliates may also issue or underwrite or assist unaffiliated entities in the issuance or underwriting of other securities or financial instruments that relate to the
Index. To the extent that we or any of our affiliates serves as issuer, agent or underwriter for such securities or financial instruments, our or their interests with respect to such products may be adverse to those of the holders of
the Notes. Any of these trading activities could potentially affect the performance of the Index and, accordingly, could affect the value of the Notes, and the amounts, if any, payable on the Notes.
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Inconsistent Research — Royal Bank or its affiliates may issue
research reports on securities that are, or may become, components of the Index. We may also publish research from time to time on financial markets and other matters that may influence the levels of the Index or the value of the Notes,
or express opinions or provide recommendations that may be inconsistent with the purchasing or holding the Notes or with the investment view implicit in the Notes or the Index. You should make your own independent investigation of the
merits of investing in the Notes and the Index
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Market Disruption Events or Unavailability of the Level of the Index
and Adjustments — The payment at maturity, the valuation dates and the Reference Asset are subject to adjustment as described in the product prospectus
supplement. For a description of what constitutes a market disruption event as well as the consequences of that market disruption event and the unavailability of the level of the Index on the valuation dates, see “General Terms of the
Notes—Unavailability of the Level of the Reference Asset” and “—Market Disruption Events” in the product prospectus supplement.
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Index =
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free float market capitalization of the
divisor of the Index
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divisor of the Index
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