City National Corp., Hollywood's "bank to the stars," could expand its entertainment business to London within five years under ownership by Royal Bank of Canada, Chief Executive Officer Russell Goldsmith said.
Royal Bank, Canada's second-largest lender by assets, agreed to buy Los Angeles-based City National on Jan. 22 for about $5.4 billion. The cash-and-stock deal offers City National the opportunity to become "the premier entertainment bank in the English-speaking world," with new beachheads in Vancouver, Toronto and ultimately the U.K., Goldsmith said.
"RBC has a significant presence and a bank charter in London," Goldsmith, 64, said in a Jan. 27 phone interview from his Beverly Hills office. Within five years "I think we can establish a private bank and an entertainment bank with wealth- management capability in London."
City National, which has long focused on a show-business clientele, could target a U.K. film industry that, according to the British Film Institute, employed more than 66,000 people in 2013. The industry contributed 2.9 billion pounds ($4.4 billion) to the U.K. economy in 2012, according to the latest data from the institute.
City National, founded in 1954, expanded to Nashville and Atlanta in 2011 to target the music industry and in 2013 opened ground-floor bank branches in New York City to gain visibility in a city where many Hollywood clients work and live. The Royal Bank combination also will help City National tap into Canada's entertainment industry.
"Once we put these companies together we'll work out a seamless way I'm sure for the entertainment production centers in Vancouver and Toronto to be places where we can serve our clients who are doing work in Canada," said Goldsmith, who agreed to stay on for three years after the deal is completed.
Vancouver and Toronto have been a hotbed for film production for decades thanks to a weaker Canadian dollar, tax incentives and industry expertise. Film and TV production in British Columbia, where Vancouver is the largest city, was C$1.44 billion ($1.2 billion) for the year ended March 31, according to Creative BC. Toronto, host to the annual Toronto International Film Festival, saw screen production companies spend about C$1.2 billion in 2013, according to the city government.
"Some people call them an entertainment bank, but it's only 25 percent of their overall business," Royal Bank CEO David McKay said in a Jan. 22 interview. While Royal Bank sought the firm to expand into U.S. private-and-commercial banking, McKay said he sees "compelling" possibilities for City National's entertainment expertise.
"They're very, very good at it," McKay, 51, said. "They've got proprietary systems linked in to their management offices, so they're exceptional at serving the needs of the entertainment industry."
