Daily Management Review

RBC To Open Consumer Bank In U.S. Focusing On Wealthy Clients


RBC looks to expand its services and products in the U.S.

Source: flickr.com; (CC BY 2.0)
Source: flickr.com; (CC BY 2.0)
Royal Bank of Canada has plans of opening a “consumer bank” in the U.S. which is scheduled for “early next year” while it will be “targeting wealthy clients”. The aim of this venture is to expand deposits, informed the C.F.O to Reuters following the Q1’s profits were revealed which “beat expectations”.
In CFO, Rod Bolger’s words:
“We want to broaden the product and service offering that we have (in the U.S.), similar to what we have in Canada”.
According to him, the consumer bank of RBC will first look into “high-net-worth clients in U.S.” while finally shifting its focus on “mass affluent”. The RBC’s strategy is to expand its “private banking arms” and for this is going to partner with its “U.S. rivals including Bank of America”.
In 2015, RBC has acquired the “City National bank”, an U.S. business, which now accounts for twenty three percent of the bank’s “total revenue”. C.E.O David McKay stated:
“The loan book has been growing faster than the deposit book, so growing our deposit strategy has become of paramount importance”.
McKay also informed that it will not follow any “commercial-driven strategy”instead it would turn to “client-centric approach”. However, no details regarding the scale and the costs of the new bank were revealed.
According to Reuters:
“RBC’s earnings surprise was driven by record profit in capital markets as revenue from bond trading and dealmaking rose. But executives said dealmaking could be hit if geopolitical concerns, including the coronavirus outbreak, linger.
“Following the worst year for earnings growth since the financial crisis, senior RBC executives told analysts the bank could also see margin compression this year”.
In a note, analyst Robert Sedran wrote:
“While we thought we had modeled a surge in capital markets-related revenues, the actual results made our forecasts look more like a ripple in the pond”.