Toronto-based Royal Bank of Canada (RBC) has completed its acquisition of Los Angeles-based City National Corp., which raises the number of RBC’s financial advisors in the United States to 2,100.
The purchased gives the bank combined U.S.-based client assets of US$336 billion in wealth and asset management.
“Today is a major milestone for both of our organizations as we create a leader in private and commercial banking and wealth management in the U.S., our second home market,” says Dave McKay, president and CEO, RBC, in a statement. “I’m excited about combining our capabilities to deepen client relationships and to serve a broader client base with the aim of being the preferred provider in the U.S. to corporate, institutional, commercial and high-net worth clients and their businesses.”
RBC will combine its U.S. wealth management unit and City National into one line of business under its RBC Wealth Management arm. Russell Goldsmith, City National’s current CEO, will lead the combined line of business from Los Angeles, where it will operate under the City National name.
“RBC is the ideal partner for us and, over time, we plan to grow market share in the communities and among the industries that our company serves,” says Goldsmith in a statement. “We also intend to create new opportunities by working closely with RBC’s outstanding U.S. Wealth Management and U.S. Capital Markets businesses.”
The total value of the transaction is US$5 billion, which will be divided between US$2.6 billion in cash and US$41.6 million in RBC common shares.
“In addition, RBC will issue US$275 million of RBC first preferred shares in exchange for all outstanding shares of City National preferred stock,” states RBC’s announcement. “The transaction is expected to reduce the Q1/2016 Common Equity Tier 1 ratio of RBC by approximately 70 basis points. RBC continues to forecast a strong capital position going forward.”