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RBC to shrink wealth management business in restructuring that could hit 300 employees
Royal Bank of Canada is shutting down its international client-wealth-management business in the Caribbean, along with some international advisory businesses in Canada and the United States, following a “strategic review.”
Sources say the restructuring of the international wealth-management operations of Canada’s biggest bank could affect about 300 employees, including a number of brokers and private bankers based in Toronto and Montreal.
Contacted by theFinancial Poston Thursday, RBC spokesperson Claire Holland confirmed the withdrawal from certain businesses, but declined to give figures on the size of the business or the employees affected.
“As there are a number of strategic options being considered as part of the exit, it would be premature as this stage to estimate the number of employees that will be impacted,” she said.
“These changes represent a small segment of our RBC Wealth Management business.”
According to RBC’s third-quarter results, its U.S. and international wealth-management operations — of which the closures will only affect a portion — had $43.2-billion in assets under management. The bank reported $442-billion in assets under management across all wealth-management divisions.
One source with knowledge of the situation said an internal memo about the changes caused “a bit of a shock” within the bank.
RBC said it is making the changes as part of an effort to pursue “sustainable, controlled growth and profitable scale” in priority markets. Ms. Holland said the decision to exit certain businesses does not reflect on the quality of the bank’s employees or clients.
“The bank’s long-term vision is a scalable and more focused wealth management business serving high net worth and ultra-high net worth clients from our key operational hubs in Canada, the U.S., the British Isles and Asia,” she said, adding that
the bank does better when it is able to “leverage and build on the strengths of RBC’s other businesses.”
Thursday’s developments follow Royal Bank’s decisions over the past year to shutter wealth management operations in South America. Offices have been closed in Chile, Brazil, and Uruguay.
The focus of the bank’s international growth strategy will now be on operating in major financial centres where RBC has “competitive strengths,” Ms. Holland said.
According to the bank’s third-quarter financial statements, Royal Bank generated $798-million in net income for the first nine months of the fiscal year from its wealth management businesses. In the comparable period of the previous year net income was $684-million.
RBC brokers in Montreal and Toronto offer brokerage and private banking services for non-U.S. customers. In addition, private banking operations in the United States offer services including trust and fiduciary, discretionary investment management, investment advisory, and international tax consultancy.
Earlier this month, the Bank of Nova Scotia took a number of charges related to its operations outside Canada.
Scotia, Canada’s third-largest bank, said it would close or downsize about 120 international branches, primarily in Mexico and the Caribbean. The move is intended to reduce overlap following acquisitions, and to keep the bank’s focus on high-growth areas.
It also took additional credit provisions related to its hospitality portfolio in the Caribbean, a region that has been plagued by slow growth since the financial crisis of 2008.
Earlier this year, Canadian Imperial Bank of Commerce took a $420-million goodwill impairement charge related its investment in CIBC FirstCaribbean International Bank Ltd., and Royal Bank of Canada agreed to sell its troubled Jamaican banking business to rival financial firm Sagicor Group Jamaica Ltd.
Category: Wealth management