Royal Bank of Canada has a tier 1 ratio, a measure of equity and retained earnings to risk-adjusted assets, of 9%, which is the lowest amongst its peers. The industry average is 9.8%. The lower ratio means RBC will not be able to add as much risky, but potentially higher returning assets compared to their competitors.
RBC has commercial banking operations in 7 states in the Southeastern US, including Florida. The Florida market has had a severe downturn in housing prices, which has led to defaults. RBC originated and owned loans in this market. Further deteoriation would lead to more write-offs.
Canada's economy is centered around energy and mining production. Falling demand for resources will apply downward pressure to commodities such as natural gas and oil, which in turn will decrease Canadian companies' revenue. Rising unemployment and less capital spending means less capital markets business for RBC and a decrease in the ability of people to pay back loans that RBC owns.