Royal Bank of Canada, the country's largest lender by assets, will consider acquisitions of as much as C$5 billion ($4.9 billion) as it seeks to expand its wealth- management unit, Chief Financial Officer Janice Fukakusa said.
The size of the takeovers could range from C$1 billion to between C$3 billion and C$5 billion, Fukakusa said today at a financial-services conference in New York. "The size that we've been doing is anywhere from the C$500 million range up to C$2 billion, so they're pretty manageable acquisitions."
Royal Bank has expanded its wealth-management business through takeovers, including its 2010 purchase of London-based fixed-income money manager BlueBay Asset Management Plc for C$1.52 billion. Wealth management contributed 11 percent of the Toronto-based lender's profit in the first six months of the fiscal year, according to financial statements.
"What we're looking at is more on the wealth-management side in terms of asset management," Fukakusa said. "We're looking at expanding some of our product capability and distribution capability in markets where we have a lower presence."
Royal Bank would favor deals that expanded its equity capability, "given where the fixed-income cycle is," she said.
"That would be in markets where we have some other distribution or product capability, through capital markets or wealth and we're trying to enhance that capability," she said.
Royal Bank is a potential bidder for Scottish Widows Investment Partnership, the asset-management business of Lloyds Banking Group Plc, Dow Jones & Co.'s Financial News reported yesterday, citing unidentified people. Rina Cortese, a Royal Bank spokeswoman, declined to comment on the report.
The lender isn't looking for acquisitions to expand its RBC Capital Markets investment-banking unit, preferring to expand internally or by hiring bankers, Fukakusa said.
"The growth in capital markets is organic growth," she said. "We have not contemplated an acquisition of a capital markets platform or a company, it's more along the lines of getting teams."
Royal Bank slid 0.4 percent to C$59.16 at 11:08 a.m. in Toronto. The shares have lost 1.2 percent this year, compared with the 2 percent decline of the eight-company Standard & Poor's/TSX Commercial Banks Index.