RBC Gung Ho for Expansion

The Royal Bank of Canada (RBC) wants a bigger slice of investment banking fees in the United States. It presently collects about 3.5 percent of all fees paid to the investment banks in the US. The RBC target is now 4.5 percent of $40 billion investment banking fees pool. The fee is collected for activities such as equity financing arrangement and corporate takeovers. It also manages sales of bonds.

According to Blair Fleming of RBC Capital Markets operational in the United States, the bank is satisfactorily chugging along. The Capital Markets head of the bank said that the bank is trying to capture a 4.5 percent share within the subsequent three years.

Competition

RBC is not alone. Canadian rival banks Toronto-Dominion Bank and the Bank of Montreal are also searching for ways to acquire a bigger share of investment banking business in the United States. Bank of Montreal had an extremely productive 2016. The bank intends to replicate the success of 2016 by following last year's template in greater quantities. Patrick Cronin of BMO Capital Markets said that leveraging the balance sheet of the bank and consequently building on the existing longstanding ties with a number of companies will help in the US share expansion.

According to Cronin, part of Bank of Montreal's success will simply be on the maturation of the client relationships. The steady and slow maturity of such a relationship will then go on to larger transactions.  There will be more relevant positions in these transactions.

Securities and banks

The TD Securities division of Toronto-Dominion is trying to scale up what is presently the smallest American operation among three Canadian banks. The biggest US operation of Toronto-Dominion is the retail lender called TD Bank. It has pushed its wholesale banking towards expansion under the stewardship of Glenn Gibson, TS Securities regional head. The firm has approximately 1,000 employees in American wholesale banking. It can be compared favorably with approximately 23,000 in the retail businesses. These includes TD Bank.

The US-based TD Securities is on its way to meet its 2015 outlined goals. This will increase the spending of multinational companies. It will double the number of government, corporate and institutional clients within the year 2020. Analysts also see growth potential from the January 27 purchase of Albert Fried & Co, a prime brokerage based in New York. At present, TD Securities is just 10 percent of the earnings of the bank. There is a need to get bigger and make it about 15 percent.

Leave a Comment