The rapid growth of a new affluent class in emerging-market economies — one that will require all manner of financial products and services — has caught the attention of banks around the globe, Toronto-based Royal Bank of Canada among them.

“International financial institutions are salivating at the opportunity,” says Raj Kothari, nation-
al practice leader for the asset-management industry with PricewaterhouseCoopers LLP in Toronto.

But RBC also has its eye on serving the needs of the aging baby-boomer cohort in North America, who are seeking out retirement advice and products.

It is these two opportunities that are driving the RBC’s recent refocusing of its overall wealth-management strategy.

Effective November 2010, RBC Wealth Management was reconfigured from three geographical businesses into four: Canada, the U.S., Britain and emerging markets, with the last two divisions carved out of what had been the international division. Three cross-border groups — global asset management, global wealth services and the newly formed global trust, which was also carved out of the international division — now operate across the four geographical business lines.

“We feel we have strong momentum,” says George Lewis, group head of RBC Wealth Management, “and now the right organizational structure, to really capitalize on our capabilities.”

Countries in Asia — particularly China and India, as well as those in parts of Eastern Europe and South America — are benefiting from above-average economic growth, resulting in the rise of a new affluent class.

“We are seeing wealth creation continue in [emerging] economies,” Lewis says, “particularly among high and ultra-high net-worth clients.”

In January, Lew-is hired Barend Janssens, a wholesale and private- banking veteran from Netherlands-based ABN AMRO Group, to head RBC Wealth Management’s emerging-markets division. Janssens, who is based in Singapore, will be responsible for: building wealth-advisory teams in Asia, the Middle East, Europe and Latin America; overseeing the acquisition of new HNW clients; and expanding existing client relationships.

And, despite the toll the recent financial crisis took on retirement funds, the opportunity available in serving the retiring baby boomers remains attractive.

“From a demographic point of view,” Lewis says, “that’s one of the most certain trends — by definition. And I think that’s a good thing to plan a business around. [That’s why] our retirement solutions are a big focus of our asset- and wealth-management businesses.”

The global trust group, under the leadership of Paul Patterson, will be looking to expand its reach across the four geographical business lines, providing its suite of private banking and trust and fiduciary services for HNW clients.@page_break@Another key aspect to RBC’s wealth-management strategy will be to find ways to leverage the bank’s asset-management capabilities.

In October, RBC bought Britain-based wealth-management firm Bluebay Asset Management PLC for £963 million ($1.6 billion), giving RBC, Lewis says, “tremendous capabilities in European and emerging-market fixed-income and alternative strategies.”

In 2008, RBC bought Van-couver-based Phillips Hager & North Investment Management Ltd. — a key acquisition that solidified the bank’s asset-management strength in Canada. Global asset management, headed by John Montalbano, now has the mandate of maintaining that division’s 50% contribution to overall earnings at RBC Wealth Management.

“There’s a tremendous opportunity,” Lewis says, “as we get more global capability in asset management, which we now have, to drive an RBC solution to a much greater extent for our wealth businesses.”

The bank is also intent on building out its wealth-management business in the U.S., where it has been busy hiring advi-sors. As of February, RBC Wealth Management U.S., formerly known as RBC Dain Rauscher, had 2,200 financial consultants, up from 1,800 two years ago, and US$166.4 billion in assets under administration.

“We feel we can drive much greater profitability,” Lewis says, “based on the scale we’ve achieved [in the U.S.] now.”

Finally, RBC Wealth Manage-ment will be looking to strengthen its position in the Canadian wealth-management market, overseen by David Agnew, head of the bank’s Canadian brokerage, as well as other domestic wealth-management units.

The close relationship between the bank’s capital markets and wealth-management businesses, which both have a global focus, gives RBC advisors a competitive advantage, Lewis says: “We will have more capability in terms of global solutions for our Canadian clients than anybody else. That’s already been the case, and the gap is simply going to get larger.”

RBC Wealth Management has given Agnew the target of expanding the bank’s market share of Canadian HNW client assets from its current level of 16% to 25% over the next several years.

And, as the various pieces in the bank’s overall wealth-management strategy come together, RBC will be looking at opportunities — perhaps as soon as later this year — to deploy a more co-ordinated global branding strategy.

Already, Lewis argues, RBC Wealth Management can stand “toe to toe” with global peers such as the major U.S. and European banks in terms of the HNW and UHNW markets.

“We really do have the global reach of those institutions,” Lewis says, “in terms of capital strength and brand and stability.”

Financial services analysts say that it’s been clear for some time that RBC has been targeting the global HNW market and signalling it is less interested in expanding in other business lines, most notably U.S. retail banking.

Most of RBC’s recent capital deployment has been in its wealth-management unit, says a report published in April by Barclays Capital Canada Inc. of Toronto, not only in terms of acquisitions, but also in terms of new hires. IE