Royal Bank of Canada's second U.S. acquisition deal in a month would give it its first dedicated U.S. trust operation.
Neither Royal Bank nor National Life Group disclosed the price of the deal for American Guaranty and Trust, National Life's personal trust unit. The agreement was announced Wednesday and is expected to close by Sept. 29.
Michael Moodie, the head of global private banking in the United States and the Caribbean for Royal Bank, said the Toronto company lacks a U.S. trust business for high-net-worth clients, which he defined as those with investable assets of more than $1 million. "We are filling a gap," he said in an interview.
Mr. Moodie said Royal Bank has been referring such clients to Comerica Inc. under an alliance between the Detroit banking company and RBC Dain Rauscher. He said Comerica would still handle accounts for affluent clients - those with investable assets of less than $1 million.
After a three-year hiatus from U.S. dealmaking, Royal Bank announced Aug. 9 that it was buying the $1.8 billion-asset Flag Financial Corp. in Atlanta for $456 million in cash. Flag is to become part of the $21 billion-asset RBC Centura Banks Inc. of Raleigh under that deal, which is expected to close by yearend.
Royal Bank, which has assets of $463.2 billion, spent more than $6 billion in U.S. acquisitions from 2000 to 2003. Mr. Moodie said its most recent acquisition in U.S. private banking came in July 2002, when it bought the Americas private banking operations of Barclays Bank PLC. In 2004, Royal Bank launched a massive overhaul of its U.S. operations to regain earnings momentum from its acquisitions.
American Guaranty, of Wilmington, Del., has about 30 employees. It administers more than 1,000 personal trusts and holds more than $1.3 billion in trust and investment accounts. Lee Cheney, the unit's president and chief executive, is to become the head of Royal Bank's U.S. trust business, reporting to Mr. Moodie. National Life is based in Montpelier, Vt.
Royal Bank has private banking offices in New York, Miami, San Francisco, and Houston, though until 18 months ago they mostly offered private banking services to nonresidents. Mr. Moodie said it is looking at opening offices in other markets such as Los Angeles, Seattle, Chicago, and Atlanta.
In its fiscal third quarter, which ended July 31, revenue at Royal Bank's wealth management operations in the United States and the Caribbean fell 4% from the previous quarter but rose 12.9% from a year earlier, to $486 million.
