Thursday, February 08, 2007

RBC Capital Markets Appoints Co-Presidents

The Globe and Mail, Boyd Erman & Sinclair Stewart, 8 February 2007

RBC Capital Markets, the country's biggest securities firm, is drawing up a road map for succession at the top by naming co-presidents who will oversee everyday operations.

Doug McGregor and Mark Standish will share the president's job and become the co-chairmen of the firm's key operating committee, enabling CEO Chuck Winograd to spend more time planning strategy and working on deals.

The two men come from different sides of the firm, with 45-year-old Mr. Standish in New York focusing on bonds, derivatives, foreign exchange and services for hedge funds, while Mr. McGregor, 50, works in Toronto overseeing corporate finance, mergers and acquisitions, and stock sales and trading.

The firm, owned by Royal Bank of Canada, is not the first to try the two-heads approach. When David Wilson left Scotia Capital Inc. to become head of the Ontario Securities Commission, John Schumacher and Steve McDonald were made co-chairmen and co-CEOs. The idea is not to set up a competition for the CEO's chair, said Mr. Winograd, but to split up responsibility to reflect the fact that RBC has grown and worked its way into such varied niches outside Canada.

"I think the co-head structure is probably more appropriate for the business as it's evolving," Mr. Winograd said. "It's definitely not a succession contest."

RBC's operations have grown quickly outside Canada, and now more than half the securities firm's employees are located abroad and about 60 per cent of its revenue comes from outside the borders of its home country. The firm has an investment banking arm in New York, and a foreign-exchange hub in London, as well as smaller outposts around the world.

RBC Capital Markets is coming off a big year, with a $1.4-billion profit in the 12 months that ended Oct. 31, but there are challenges. At home, the firm must protect its position as a dominant player against incursions by giant "bulge bracket" rivals from abroad that offer a wide suite of services to Canadian firms.

Already, aside from RBC and CIBC World Markets Inc., the ranks of the busiest merger advisers in Canada are largely made up of foreign firms. "You have to have a spectacular product platform to compete, with a large-cap Canadian issuer, because if you don't, the bulge bracket dealers will eat your lunch," Mr. McGregor said.

In the U.S., where the firm has been growing by acquisition, it's still a relatively small player in a hypercompetitive market. "In Canada we're all things to all people," Mr. Standish said. "Outside of Canada we tend to be more specialized."

Stepping back from the day-to-day operations will be difficult for a "very hands-on guy," Mr. Winograd acknowledged. "It's going to be gradual, but this is the catalyst.

"For me, it will involve a change in style, because that's what has to happen for succession to be effective," he added. Still, he doesn't expect to be too hands-off.

"I can't imagine that I'm going to stop reading my numbers and if I'm having a thought before bed, [Mr. Standish and Mr. McGregor] are going to hear about it."

Mr. Winograd expects to now spend more time trying to drum up business. "I like clients and doing deals," he said. "I'd like a chance to do more of them."

RBC, in another promotion, named George Lewis head of a new global wealth management unit as part of a plan for international growth in the bank's three main businesses: capital markets, wealth management and banking.
• Mark Standish
Age: 45
Birthplace: London, England
Resides: New York
Oversees: Global debt, structured product, foreign exchange, prime brokerage.
Little-known fact: Got his first banking job at 16 as a "teaboy," making tea, sweeping out the vault, and stamping cheques.

• Doug McGregor
Age: 50
Birthplace: Etobicoke, Ont.
Resides: Toronto
Oversees: Global corporate finance, M&A, equity sales and trading.
Little-known fact: Was part of the national wrestling team as a student at University of Western Ontario.