Royal Bank of Canada's chief executive said it will continue avoiding major investments here - including acquisitions - to help achieve its goal of improving returns at its struggling U.S. retail bank.
"Our primary focus in the near term is to get the returns at RBC Centura back to a more normalized level relative to its peer banks in the Southeast," Gordon Nixon told investors Wednesday at a New York financial services conference sponsored by Citigroup Inc.'s Smith Barney.
Canada's largest banking company has spent more than $6 billion on U.S. acquisitions since 2000, but disappointing results at RBC Centura Banks of Rocky Mount, N.C., have kept Royal Bank on the sidelines recently.
Mr. Nixon announced a management shake-up and a companywide reorganization last fall, including new leadership at RBC Centura. His goal is to improve lagging returns and revive interest in Royal Bank's stock, which had a premium valuation until last year.
For now focusing on RBC Centura's profitability will do more to create shareholder value than "aggressive expansion," he said. "It's quite unlikely that we would make a significant acquisition in the U.S. banking platform," especially given the high valuations among banks that might be targets.
Mr. Nixon also said prospects for more mergers among Canada's large banks have dimmed. With Prime Minister Paul Martin leading a minority government, reforms that would allow more consolidation are unlikely right now, he said.
"We're still confident that it will happen at some time, but not in the short term," Mr. Nixon said.
