Royal Bank of Canada (RBC) is eyeing to expand its US banking operations through the acquisition of “highly coveted” wealth-management firms, reported Bloomberg.  

Chief executive officer Dave McKay has expressed the bank’s interest in enlisting advisers capable of attracting new clients and is particularly keen on businesses that can contribute “lots of sweep deposits” to enhance RBC’s funding within the US market. 

The expansion strategy also includes a focus on Asia, where McKay is open to forming partnerships with other banks to facilitate support for RBC’s clients engaged in global business activities.  

McKay emphasised the importance of wealth distribution and customer relationships, stating, “We want more customers, we want that relationship.” 

While McKay did not disclose specific acquisition targets, he acknowledged the presence of “some high-quality wealth franchises” that are likely to attract intense competition from other potential buyers.  

He emphasised that any deals pursued by Royal Bank would be contingent on their ability to deliver value at the right price, saying, “It would be, I think, a very aggressive bid for them by a number of players and, therefore, can you make the numbers work?” 

RBC’s US wealth-management business, including City National Bank based in Los Angeles, reported a revenue increase of nearly 12% to C$8.91bn ($6.4bn) in the last fiscal year.  

McKay is focused on organic growth and also open to acquisitions, particularly those that include sweep programmes.  

These programmes are designed to transfer uninvested cash in brokerage accounts into higher-interest accounts automatically, potentially enhancing the bank’s funding capabilities in the US. 

Given RBC’s substantial market capitalisation, which is reportedly nearly equivalent to the combined value of Toronto-Dominion Bank and Bank of Nova Scotia, McKay suggested that the bank could theoretically consider a major acquisition of a firm as large as Charles Schwab Corp.  

However, any such deal would need to be accretive and beneficial for RBC’s shareholders. “We’ve got lots of capital, lots of ability to do it. The challenge is you’ve got to make it accretive,” McKay stated. 

In addition to US expansion, McKay is also evaluating smaller wealth-management deals in the UK, following the 2022 acquisition of Brewin Dolphin Holdings.  

Despite not yet meeting its expected financial targets from the Brewin Dolphin deal, RBC anticipates further revenue growth through increased cross-selling of its products to UK customers. 

In the wake of US tariffs, the Canadian government is actively exploring new export markets, with a particular focus on Asia as a key component of their strategy. 

Geopolitical conditions are encouraging the bank to adopt a proactive approach, McKay noted. This involves supporting US, Canadian, and European companies in their expansion into Asia by providing services such as treasury management and lending.