RBC preps for global wealth push

The Royal Bank of Canada has rejigged its internal structure, boosting the profile of its wealth management operations by creating its own business line. The move was touted as a prelude to more aggressive expansion into the global wealth market.

The reorganization consolidates the bank’s full-service brokerage lines, global private banking and trust operations with RBC Asset Management. Prior to this move, RBC’s global wealth management services fell under the Canadian personal and business banking line.

The new wealth management line will be headed up by George Lewis, previously head of RBC’s Canadian wealth management operations. The move likely signals an expansion in the growing global wealth management industry.

Beefing up its global presence in wealth management puts RBC in competition with such international titans as UBS and Goldman Sachs, so the Canadian bank faces a tough slog to grow its market share and improve its name recognition.

The bank’s wealth management division manages over $475 billion in client assets, as of October 31, 2006, which the bank considers “critical mass” to justify the stand-alone division. By comparison, UBS’s wealth management businesses managed over $1.3 trillion US, according to the company’s 2005 annual report.

Still, the bank’s CEO says there is plenty of room in the sandbox for smaller players.

“We believe that global demand for wealth management products and services will continue to increase as global economies develop and populations mature,” said Gordon Nixon, RBC president and CEO. “RBC is very well positioned to generate high-quality revenue and earnings growth from this demand, and we intend to grow this segment of our business aggressively over the next several years.”

Outside of Canada, RBC’s largest wealth management market is the U.S., through its RBC Dain Rauscher subsidiary. The bank currently has 33 wealth management offices in 21 countries.

With the global wealth management operations stripped out, RBC’s largest business segment will be renamed “Canadian banking” and will be headed by Jim Westlake. That division is comprised of personal banking, business financial services, cards and payment solutions, global insurance and RBC’s retail investment business in Canada.

The new corporate structure is effective immediately and will be reflected in the bank’s second quarter earnings report, slated for May 25, 2007.

Filed by Steven Lamb, Advisor.ca, steven.lamb@advisor.rogers.com