Royal Bank of Canada (RBC) has reached an agreement to acquire City National, a US-based lender serving HNW clients, for $5.4bn as part of its efforts to expand wealth management operations abroad.
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Subject to customary closing conditions and regulatory approvals, the transaction is scheduled to complete by the end of 2015. The deal has already received approval from the boards of both companies.
As part of the agreement, RBC plans to merge its US wealth management unit with City National, which will operate as a separate entity under RBC.
Upon completion of the transaction, Russell Goldsmith will continue to remain as City National’s chairman and CEO and will also lead RBC’s US wealth management unit.
RBC will acquire City National for $2.7bn in cash and 44m RBC shares. RBC offered $47.25 in cash and 0.7489 in stock for each City National share.
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By GlobalDataRBC said the deal is expected to add to its earnings in the second year following the closure of the deal.
RBC president and CEO Dave McKay said: "City National serves high-net-worth and commercial client segments in select high-growth markets, and represents a unique opportunity to complement and enhance our existing US businesses and product offering."
Goldsmith said: "This combination will promote both continuity and growth, enabling our outstanding team of colleagues to maintain and even strengthen City National’s value proposition. It also will enhance what we can do for our clients and the communities we serve."
