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ROYAL BANK OF CANADA

Question # 1
The weak market environment continued through to Royal Bank of Canada (RBC) third quarter of 2008. �The declining markets produced an end result of $498 million ($263 million after tax and related compensation adjustments) in writedowns which is illustrated in Table 1(in the Appendix) – Summary of Writedowns. Capital Markets writedowns of $173 million in the third quarter of 2008 resulted from declines in fair value of credit default swaps (CDS) with monoline insurer MBIA Inc. that represents credit protection purchased to hedge the credit risk exposure to super-senior (AAA) tranches of structured credit transactions, expected recovery rates on the underlying assets and other parameter inputs.�
“RBC total provision for credit losses increased $156 million, or 88% in Quarter 3 in 2008, in comparison to Quarter 3 in 2007 which is illustrated in Table 2 – Credit Quality Performance. Wholesale provisions increased by $120 million,......

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