Wednesday, September 06, 2006

RBC Agrees to Buy AG&T

Bloomberg, Sean B. Pasternak, 6 September 2006

Royal Bank of Canada, the country's largest lender by assets, agreed to buy American Guaranty & Trust from the National Life Group, adding a trust business to its U.S. asset-management operations.

American Guaranty, based in Wilmington, Delaware, has 30 employees and administers more than 1,000 trusts with about $1.3 billion in accounts, Toronto-based Royal Bank said today. The lender didn't disclose the price.

The acquisition is Royal Bank's second in the U.S. in as many months, after Chief Executive Officer Gordon Nixon turned around the bank's operations there. On Aug. 9, the bank agreed to buy Flag Financial Corp., a consumer bank in Atlanta, for about $433.5 million.

Growing in the U.S. is ``a strategic priority'' for Royal Bank, said Michael Moodie, vice-president and head of U.S. and the Caribbean for RBC Global Private Banking, in a telephone interview. ``Not having a trust business as part of that estate- planning capability is a hole'' the bank had to fill, he said.

Profit from Royal Bank's U.S. and international consumer- banking business rose 39 percent in the fiscal third quarter to C$111 million ($100 million). The lender cut costs in the U.S. and sold its unprofitable mortgage business there last year.

Royal Bank has about 30 offices around the world that offer international banking, trust, brokerage and other services to clients with about $1 million or more in investable assets. The bank's most recent trust business purchase was the U.K.'s Abacus Financial Services Group Ltd. The bank is looking for other trust businesses around the world, said Moodie, 41.

Today's transaction, which is ``not material'' to earnings, should close by Sept. 29, Royal Bank said.

Separately, the bank said it appointed Dan Smith to lead a real estate capital banking group in the U.S. Dan LePage was also appointed head of U.S. real estate corporate banking, and the firm hired Kevin Stahl and Bryan Maher for the real estate investment banking group.