Eighteen months after a string of hefty losses led to a management shakeup at a key U.S. subsidiary, Royal Bank of Canada executives pulled back the curtain Thursday on the company's revised U.S. strategy.
The revamp involves cross-selling more products to clients, expanding in the mortgage business and continuing to concentrate on certain longstanding niches. Those historical focuses include lending to middle-market companies, providing banking services to the entertainment industry and serving high-net-worth customers.
But as the Canadian company seeks to build on what worked for decades at City National Bank — the Los Angeles-based subsidiary that ran into trouble in 2023 — it may eventually do so without the City National name.
"We plan to start the process of migrating the one brand in the U.S. When you think about our brand in the U.S., you should think RBC," Greg Carmichael, executive chair of RBC's U.S. operations, said in prepared remarks.
Carmichael, a former Fifth Third Bancorp CEO
In his latest role, Carmichael is leaning into his experience at Cincinnati-based Fifth Third, where he served as chief executive for seven years. He has hired numerous former Fifth Third colleagues, including City National CEO
At the investor day on Thursday, RBC CEO Dave McKay said Carmichael brought from Fifth Third the idea of adding the capacity to originate mortgages with the intent to sell them.
"We didn't have that," McKay said. "We were originating mortgages and putting them on our balance sheet … and took obviously the interest-rate risk that came with that. And that limited how much we could take."
Once the expanded mortgage business is up and running, which RBC expects to happen later this year, the bank should be able to originate more jumbo mortgages, which will open up a larger cross-selling opportunity with wealth-management clients.
"We've never had that. It generates a whole new vertical as fee-based income," McKay said.
Earlier in the day, Carmichael spoke about breaking through silos within RBC to achieve more cross-selling. That message ties into a larger company-wide goal of achieving more integration across segments, which executives summarized Thursday as "One RBC."
"Core middle-market clients need strong cash management and capital market services," Carmichael said. "Our entertainment clients need access to stronger wealth advisory services. We have all the products and services, but what we need to do is offer them consistently and holistically to our clients."
RBC executives also alluded to an effort to expand the company's U.S. credit card offerings, though details were scarce. And they described plans to add 600 new financial advisors in the United States.
At the same time, Carmichael spoke about shoring up areas where City National long focused. City National was long known as Hollywood's "Bank to the Stars," and it's now looking to expand its entertainment banking franchise in the sports business.
Earlier this month, City National announced the addition of
One part of RBC's U.S. business that seems unlikely to expand much is its branch footprint. The company is looking to achieve stronger deposit-gathering capabilities and a better funding mix, Carmichael said, before adding this caveat: "Very branch-light."
