Slowly, But Surely: RBC to Phase in New Banking Capabilities
RBC's recently completed acquisition of City National Bank has boosted headcount and assets – but advisors may have to wait before seeing new banking and lending capabilities.
"The reason we are going slowly is to make sure we do it right," says John Taft, CEO of RBC Wealth Management-U.S.
That's intentional, Taft says, as executives want to make sure the integration of new services is done correctly and smoothly following the acquisition of the Los Angeles-based City National, long known for serving Hollywood elites.
"City National is known for an extraordinarily high level of client service. It's part of their culture and values. They want to preserve that, and they want to give our wealth management client's the benefit of that experience," he says.
The $5 billion acquisition is the largest the Canadian firm has done in the U.S., according to a spokeswoman. The deal closed on Monday. RBC's headcount rose from about 1,900 to 2,100 advisors in the U.S. while combined assets stand at $336 billion in wealth and asset management, the firm says. The boost in headcount comes after RBC had its best year for recruiting in 2014, adding 82 advisors with more than $8 billion in AUM and generating almost $60 million in production.
Taft says the two units will slowly begin rolling out new capabilities. The first stage will be to start with pilot projects in City National's core markets, which include Beverly Hills and San Diego.
"We'll see what works and then move into other markets, like Los Angeles and New York. Eventually, we'll move out of their markets into other markets where RBC has a presence. It's about offering banking capabilities of CN through RBC financial advisors," Taft says "The two businesses will currently collaborate more than they will integrate."
WINNING THE HNW CLIENT
Taft says that the deal furthers the firm's mission to serve the needs of high-net-worth clients.
"When it comes to residential mortgages, personal lines of credits, credit cards -- City National has a private banking and commercial banking capability that will help us serve more of the needs of our clients than we have in the past. That's our long standing strategy of being the primary advisor to our clients," he says. "Our ambition is to do a better job of that than anyone else in this market."
Alois Pirker, an analyst at research firm Aite Group, compares the combination of the two units to Bank of America and Merrill Lynch.
"Keeping the same brand may indicate that the integration is not going to be that deep. Again, this would be similar to Bank of America and Merrill Lynch, where they operate differently. They're really doing their own thing," he says.
However, that doesn't preclude further integration in the future.
Pirker also adds that the deal is a good one for RBC as the two firms "have a client demographic that is compatible and that you can cross-sell [to]."
He says that it presents RBC with an opportunity to present a more robust offering to high-net-worth clients, particularly in coveted markets like Los Angeles and New York.
"It's a huge opportunity for them to differentiate and present a unique offering in the high-net-worth space," he says.