Royal Bank of Canada is putting its leadership in the hands of David McKay, whose consumer-lending experience is a departure from the investment-banking background that propelled Gordon Nixon to chief executive officer 12 years ago.

Royal Bank yesterday said that McKay, 50, currently head of personal and commercial banking, will be the next CEO of Canada's largest company by market value when Nixon, 56, retires on Aug. 1. Nixon's departure is the third CEO changeover announced this year by the country's largest lenders.

McKay, who becomes president on Feb. 26, has spent 25 years at Canada's largest lender in areas including commercial account management, group risk management and corporate banking in Canada and Japan. He's overseen personal and commercial banking for Canada, the U.S. and Caribbean since November 2012 after spending more than four years as group head of Canadian banking.

"He does run 50 percent plus of the bank, and his banking pedigree and background are outstanding," Nixon said in an interview from Toronto. "Dave would be considered one of the best retail bankers in the world."

While retail banking is Royal Bank's biggest business, it makes up the smallest share of earnings among Canada's five largest lenders. Personal and commercial banking accounted for 53 percent of Royal Bank's profit in the fiscal year ended Oct. 31, compared with 75 percent for Toronto-Dominion Bank and 58 percent for Bank of Montreal.

"The meat and potatoes of banking business is the personal and commercial, and Royal has done a very good job in that area," said John Kinsey, who helps oversee about C$1 billion ($937.7 million) at Caldwell Securities Inc. in Toronto.

McKay has turned to acquisitions to help lift retail bank earnings. Royal Bank bought Ally Financial Inc.'s Canadian auto- finance and deposit business in February for C$3.7 billion, a move that helped boost earnings for personal and commercial banking 8.6 percent to C$4.44 billion this year.

"We're in really three primary businesses: we move money, we store money and we lend money," McKay said yesterday in a telephone interview from Toronto. "The experience I've had in the money-lending side, in particular, whether it be in commercial-account management or national-account management, are the fundamentals to being a banker."

McKay, who has an MBA from Western University's Richard Ivey School of Business and a bachelor's degree in mathematics from the University of Waterloo, both in Ontario, said he's anticipating a lot more work and a "significant" personal commitment for the new job, though he's "looking forward to that challenge."

McKay will take over in a year that analysts expect will see the pace of profit growth slow as overindebted Canadians pare borrowing. Total household credit in October expanded by 3.7 percent from the same month in 2012, its most sluggish pace in 30 years, according to Bank of Canada data. Canada also posted the lowest year-over-year increase in residential mortgage credit in 12 years in October, the data show. Mortgage growth fell to 4.8 percent in the month from its 23-year high of 13 percent in May 2008.

Still, investors such as David Baskin, who oversees C$600 million at Baskin Financial Services in Toronto, doesn't think the change means much.

"We have never been believers in the superstar CEO theory of investing, particularly for organizations as big as the banks where there's huge range of senior management as well as middle management and a big board of directors," said Baskin, who doesn't hold Royal Bank shares. "We don't think the CEO makes that big a difference."

Nixon, a Montreal native, rose up Royal Bank's ranks through its capital-markets business. He began his career in 1979 at Dominion Securities, which was bought by Royal Bank in 1987. Nixon became a managing director of investment banking in 1989 and in 10 years became CEO of RBC Capital Markets. He was was appointed president of Royal Bank on April 1, 2001, and CEO four months later.

Since becoming CEO, Royal Bank's stock has returned an average of 12 percent a year including dividends. That compares with an average of 7.1 percent for Canada's benchmark Standard & Poor's/TSX Composite index and 9.4 percent for the S&P/TSX Financials Index. The shares have gained 20 percent this year including dividends, matching the advance of the 46-company financial index. Royal Bank rose 1 percent to C$68.84 at 9:30 a.m. in Toronto.

During Nixon's tenure, Royal Bank failed to make inroads in U.S. consumer banking after spending at least $4.6 billion over a decade on banks in the U.S. Southeast, starting with its acquisition of Centura Banks in 2001. Royal Bank cut its losses in March 2012 when it sold its money-losing North Carolina-based RBC Bank and credit-card assets to PNC Financial Services Group Inc. for $3.62 billion.

"I don't have a lot of regrets," Nixon said. "What I wish I had done with respect to the U.S. bank was to dispose of that business at an earlier stage."

Still, Nixon negotiated Royal Bank through the 2008 financial crisis, posting only a fraction of the writedowns and charges that its U.S. peers took on investments in risky subprime mortgages and debt securities.

"They went out and built up their capital markets business," following the financial crisis, said Anish Chopra, a fund manager with TD Asset Management in Toronto. "These investments take many years to pay off and you're starting to see that. On their retail side, they're pretty much focused on Canada and it's a pretty competitive area, so it's difficult to grow."

Nixon, the longest current reigning CEO among Canada's six- biggest banks, led Royal Bank to record profit of C$8.43 billion for the fiscal year ended Oct. 31, up 12 percent from a year earlier. Royal Bank's total assets were C$880.8 billion, compared with C$335 billion when Nixon took over in 2001, while the bank's stock climbed 168 percent over his tenure.

Nixon is the third CEO among Canada's six largest banks this year to retire or announce plans to do so. Bank of Nova Scotia's Richard Waugh, 65, stepped down as the top executive on Nov. 1 and Toronto-Dominion Bank's Ed Clark, 66, said in April that he'll retire in November 2014.

"I think the time is right for a transition," Nixon said yesterday on a conference call with investors to discuss quarterly earnings. "I'm very proud of what we accomplished, but feel it is a great time to look to the future and build for the longer term."

The appointment of McKay, who's married and has two teenaged children, followed at least three years of succession planning within the bank, in which he emerged among other potential candidates to become the top choice, Nixon said.

"It wasn't like it was a competition internally between two or three people; we basically narrowed that funnel over the last three years so that Dave was the obvious choice," Nixon said in an interview. "He was clearly the front-runner."

Royal Bank said yesterday that Mark Standish, 52, the New York-based co-group head of RBC Capital Markets, will leave the firm next year and his Toronto-based co-head, Doug McGregor, 57, will assume responsibility for the investment-banking unit immediately.

"It's probably kind of like in football or a hockey draft, sometimes they try and pick somebody to fill a hole," Kinsey said. "Sometimes they just go for the best available person."

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