Magazine article American Banker

Royal Bank of Canada Trims U.S. Operations to Zero in on Profits

Magazine article American Banker

Royal Bank of Canada Trims U.S. Operations to Zero in on Profits

Article excerpt

Less is more for the U.S. businesses of Canada's biggest bank, Royal Bank of Canada.

In the last three years, U.S. senior vice president and general manager David L. Robertson has reduced the bank's corporate client base to about 685 from 1,500.

At the same time, he has reduced the bank's staff to 217 from 415, even as the bank has added an asset-backed securities business, a syndication distribution business, and a structured finance team.

And Mr. Robertson is not done. He plans to reduce the number of corporate clients even further in 1996, to 600, focusing on multinational companies that present the greatest opportunities for the bank.

In conjunction with its investment banking affiliate Dominion Securities, Royal Bank has been building its expertise in various capital markets arenas, hoping to develop a critical mass of business to justify doing business with each customer.

"We want to be able to deliver at least three or four main products to each of our clients," said the 53-year-old Mr. Robertson.

The bank also hopes to find companies that have subsidiaries in Canada, where it can provide a branch network and services ranging from payroll to cash management.

The strategy has worked so far, with fewer customers accounting for more revenues.

Mr. Robertson estimated that revenues from U.S.-based banking had reached 10% to 12% of gross revenues, up from about 8% three years ago when he took over the U.S. operations.

Some of that increased profitability can be attributed to growth in specific business lines.

"We've more than trebled the amount of foreign exchange and capital markets derivatives that we deliver to the remaining clients," said Mr. Robertson.

The key products Royal Bank is looking to deliver include trade finance, syndicated loans and standby lines of credit, foreign exchange, capital markets derivatives, and equity derivatives. …

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