Canada's RBC targets U.S. wealthy with $5.4 billion City National deal
By Jeffrey Hodgson
TORONTO (Reuters) - Royal Bank of Canada (RY.TO: Quote) is pushing deeper into the U.S. wealth management business, saying on Thursday it will buy Los Angeles-based City National Corp CYN.N for $5.4 billion in a deal that targets City's stable of high-net worth clients.
Canada's major banks, which emerged from the financial crisis largely unscathed, have been on a global hunt to expand their wealth management arms. Canadian bankers say the industry should benefit from an aging population and is less capital-intensive than traditional lending.
City National serves clients in several large metropolitan areas, including New York, Los Angeles, the San Francisco Bay Area and Orange County, California.
Executives at RBC, Canada's largest bank by market value, said they were also drawn to City National by its commercial banking arm, which they want to team up with their RBC Capital Markets unit to win more business.
RBC Chief Executive Dave McKay said the deal goes back to a 2013 meeting with City National Chairman Russell Goldsmith, who will run the combined U.S. wealth management business.
"I approached Russell, and he had never met me before. We sat down and just talked about how the two companies together could do something really special in the U.S. market," McKay told analysts on a conference call.
"He says: 'But I'm not for sale'. I go 'but one day, if you do consider selling, would you pick up the phone and call?' That's how it started."
RBC offered $47.25 in cash and 0.7489 in stock for each City National share. Continued...