Royal Bank of Canada (RY, Financial) is the largest financial institution in Canada to serve nearly 18 million clients and 80,000 employees worldwide. The corporate headquarters found its base in Montreal, Quebec, and the operational head office is located in Toronto, Ontario. The bank came into existence in 1864 in Halifax, Nova Scotia. RBC’s bank number is ‘003’ which is commonly referred to as the Institution number.
The Royal Bank of Canada boasts of 10 million customers through the chain of 1,209 branches. As a U.S. retail banking subsidiary, RBC had 439 branches in the six states of southeast serving nearly a million customers and at least 127 branches across 17 countries in the Caribbean 1.6 million clients. The investment brokerage firm is known as RBC dominion securities. They are also the provider of Investment banking services which stresses on the middle market clients.
City National Corp. acquisition deal
Mostly sought after by the stars, Los Angeles-based RBC has pegged a deal with City National Corp (CYN, Financial) acquiring it for $5.4 billion which is said to be the biggest takeover in the sector that would bring more wealthy U.S. nationals under the umbrella of Royal Bank of Canada. $93.80 per share will be paid in cash and stock for City National which is about 26% premium over Wednesday’s closing price, as quoted by the Toronto-based lender whereas Canada’s second-biggest lender by assets is ready to pay $47.25 in cash and 0.7489 of a share for each of City National’s shares.
David McKay, who joined as chief executive officer in August is hoping for the best results out of this handsome deal. He also thinks that RBC is on the right track to achieve more expansion in the years to come. In view of the worsening global economy, America still stands tall as there are upbeat investors who swear by the healthy investment market here. There was a survey carried on by Bloomberg which proved the above statement true. McKay also has high hopes from Canada as that is their second home market. City National has so far served high-net-worth and commercial-client segments in the picky high-growth market from which wafts out a unique opportunity to complement and enhance our existing U.S. businesses. They will extend the stint of the recent CEO of City National even in RBC and he will also be responsible for overlooking RBC’s wealth management business in the United States. In the last quarter of 2015, the 50% stock, 50% cash deal will see a closure.
Outlook
As Canada has an appetite for good market, buying City National will prompt the revenues to rise up a notch and there are reports of RBC having already enjoyed profit after spending $4.6 billion over a decade in attempt to make inroads into U.S retail banking which started with buying Centura Bank in the year 2001. If there were any losses during its operational span in the U.S. they were quick to tide over by selling its money-losing North Carolina-based RBC bank and credit-card assets to PNC Financial Services Group Inc. (PNC, Financial) for US$3.62 billion.
Parting words
Buying City National seems to be a lucrative deal as it has been ranked by Barron’s as one of America’s top 40 wealth managers for the last 14 years. It also has high net worth and commercial clients in some of America’s most profitable markets which includes New York, Los Angeles, the San Francisco Bay Area and Orange County. It is pitching for a boom in healthcare sectors, and Hollywood is already the stronghold of the banking giant. With this acquisition deal going through Royal Bank of Canada will gain a considerable market share of the U.S. banking market and will cement its foothold in the North American region. This move will certainly add flying colors to the banking honcho’s business numbers, and that makes it a stock worth being included in the portfolio.
