The Royal Bank of Canada applied this week to list its shares on the New York Stock Exchange.
If listed, Royal Bank would become the second Montreal-based bank to join the exchange in about a year. The Bank of Montreal was listed in late October.
Royal Bank said it was seeking the listing as a result of the growth of its businesses in the United States, including an equity derivatives unit, which it expanded recently by hiring a team of 25 investment bankers away from Kidder Peabody.
A listing adds a level of flexibility in developing those businesses, possibly through acquisitions, the bank said. The bank has indicated an interest in purchasing niche-type banking businesses, including wealth management and corporate banking.
Analysts predicted the other large Canadian banks, including the Canadian Imperial Bank of Commerce, Bank of Nova Scotia, and Toronto- Dominion Bank, would soon follow in the drive to expand their business and improve their name recognition in the United States.
"Given the globalization of financial markets and the closeness of the United States, this is a trend that'll be duplicated by Canadian banks," said Hugh M. Brown, a bank analyst at Nesbitt Burns in Toronto.
Mr. Brown said that large Canadian banks derive 20% of their business and profits from the American market.
"One of the concerns of Canadian banks is their dependency on a small, concentrated, and mature market (in Canada)," said Wendy Gleichmann, a bank analyst at Merrill Lynch. "Canadian banks are looking for ways to diversify and specialize."
Dave Robertson, a senior vice president and general manager in the bank's New York office, said that the idea of listing has been percolating for a number of years.
The current move follows seven quarters of strong earnings, which Mr. Robinson says should give the bank "a good start."
The bank suggested that by joining the exchange it could enhance the ability of its North American operations to make acquisitions.
"The bank has been talking about making an acquisition for a long time," said Teri McCoppin, a bank analyst at Toronto-based Richardson Greenshields of Canada Ltd.
Mr. Robertson said, however, that acquisitions were not the specific reason for a listing, although he added: "There is that possibility that stays open for us."
While analysts generally laud the bank's efforts to diversify its equity base, a listing on the Big Board is not an immediate shot in the arm.
The Bank of Montreal has "been incrementally increasing its profile since listing," said Ms. Gleichmann, the Merrill analyst. "The volume is not gangbusters, but it's a beginning."
She said it takes a while to gain the confidence of U.S. investors, but that a listing is definitely a positive step.
The bank hopes to complete the process of listing by the start of its new fiscal year on Nov. 1.