Wednesday, February 07, 2007

RBC Creates Wealth Management Segment

Reuters, 7 February 2007

Royal Bank of Canada is shifting some existing businesses into a new wealth-management segment and plans aggressive growth in those products and services, the bank said on Wednesday.

The realignment will see the bank's RBC Asset Management unit move into the new segment from its current spot within Canadian personal and business banking.

RBC's Canadian and U.S. full-service brokerages, the Canadian trust and discretionary investment management business, and the bank's global private banking business will also move into wealth management.

"The old structure just lumped in a lot of disparate businesses together, so this is a step in the right direction to report the business by type rather than by geography," said Ohad Lederer, a financial services analyst with Veritas Investment Research in Toronto.

As of Oct. 31, 2006, RBC's wealth management segment had about C$475 billion ($402.5 billion) of client assets under administration in Canada, the United States and outside North America, the Toronto-based bank said. It also had C$140 billion of assets under management, and 3,000 financial advisers in Canada and the U.S.

George Lewis, head of the new wealth management operations, said RBC is one of the few Canadian financial institutions with a global platform to expand in asset management and international trust functions.

"We intend to continue to grow aggressively the businesses that we have, centered around affluent and high net-worth clients, by attracting and retaining advisers and client-facing professionals," Lewis said in an interview.

Global economic growth and aging populations are expected to keep pushing up demand for asset management, brokerage and trust services, making these attractive lines for financial institutions.

"It's a business where, if your clients do well, your business does well -- it grows along with clients -- and it doesn't require a significant capital outlay to grow organically the way some other segments of financial services do," Lewis said.

RBC's other three business segments are Canadian Banking, Capital Markets, and U.S. and International Banking.

The bank will report second-quarter results under the new structure on May 25. First quarter results are due March 2.