The new top executive at RBC Direct Investing, Royal Bank of Canada's discount brokerage arm, said further contraction in the field should help his unit continue to expand in Canada and possibly in other markets.
Jason Storsley, whose promotion to president and chief executive officer of RBC Direct was announced last week and officially goes into effect Feb. 1, said that the company increased its share of the Canadian discount brokerage market by 80 basis points from June 2007 to June 2008 and that it should be able to build on that growth in the next year.
"There are more assets to be gained, more customers to be gained, and more share to be gained," he said. "We want to focus on client services and client positions, and that will put us in a position to expand our base of assets."
In Canada, only TD Ameritrade Holding Corp. has more discount brokerage clients than RBC Direct. Mr. Storsley said RBC Direct, which was started in 1989, is still largely a Canadian enterprise.
"We are not sure if are opportunities for us to expand into other markets," he said in an interview last week. "We are a global firm and we are getting more and more global in terms of our wealth management business. We remain open to looking for opportunities outside of Canada."
Those could include buyouts.
"Acquisitions are not ever out of the question," Mr. Storsley said. "We are a progressive firm, and when there are opportunities that are reasonably valued and perhaps they allow our clients to tap into additional services, we are willing to look into it. I think there are a lot of opportunities in the Canadian space to grow organically without making a deal."
Mr. Storsley, who has worked for Royal Bank of Canada for 11 years, said better service should help RBC Direct.
"Improving the services we provide will allow us to gain assets and improve our overall business," he said.
Analysts said the fact that smaller discount brokerage companies are selling or looking to sell themselves is a good thing for RBC Direct. Last week TD Ameritrade announced an agreement to buy thinkorswim Group Inc. to add scale and enhance its options platform.
Smaller brokerages are facing increased pressure to increase their revenue or sell themselves to larger competitors like TD Ameritrade, E-Trade Financial Corp., Scottrade Inc., Fidelity Investments, and Charles Schwab Corp., which control 96% of the global discount brokerage business.
Burton Greenwald, an analyst with BJ Greenwald Associates of Philadelphia, said RBC Direct has developed a strong share of the Canadian market but will need to make an acquisition if it wants to compete globally.
Mr. Storsley, who headed global equity research for RBC Asset Management and was a member of the RBC investment strategy committee and the RBC investment policy committee, said RBC Direct has an advantage in Canada in the form of Royal Bank of Canada's branch network, which allows it to offer customers "more than just online discount brokerage services."
Coaching branch employees to do more cross-selling is one way RBC Direct can expand organically, Mr. Storsley said.
RBC Direct, which until four years ago was called Action Direct, offers a range of investment products including stocks, bonds, Treasury bills, and over 2,500 mutual funds.
"I think that there are a lot of opportunities in this space," Mr. Storsley said. "The more and more I get to know the team we have at RBC Direct, the more confident I am that we can continue to reach across Canada and beyond to build this business."