Royal Bank of Canada, which recently reorganized, has not yet revealed who will run each of its units, but the first hints indicate that it plans to consolidate its investment management businesses.
Kel Landis, the chief executive officer of RBC Centura Banks Inc., which was known as Centura Banks Inc. until the Toronto company bought it three months ago, told American Banker in an interview Monday that RBC Dain Rauscher Wessels, the Minneapolis broker-dealer Royal Bank bought in January, would have an increasing involvement in RBC Centuras wealth management business and, most likely, in all of the parents wealth management businesses.
Centura very much desired Dain Rauschers increased involvement, Mr. Landis said. Dain, which has been doing this for decades, can help us build up our wealth management unit and make it better than it was, he added.
He also said he expects the brokerage and wealth management units of several other Royal Bank acquisitions to lose some autonomy.
One of RBC Centuras more senior executives has already decided to jump ship. Edward Hipp, 53, a 20-year investment management veteran who started and headed RBC Centuras wealth management unit, told American Banker in an interview Thursday that he would leave today to become a retail broker at a Legg Mason Inc. office in Williamsburg, Va.
Robert Nadler, who will succeed Mr. Hipp (and did not return phone calls seeking comment), is not new to filling Mr. Hipps shoes: He succeeded his colleague as the president of Centura Securities Inc. in June 2000 when Mr. Hipp was promoted to run the companys newly created wealth management unit.
Mr. Hipp insisted that his decision was purely personal and one he had been considering for five years. This is not a negative reaction to what is going on with Royal Bank of Canada, he said. I have been saying for years that at some point in my career I wanted to be a retail broker.
Mr. Landis agreed that Mr. Hipps decision to leave was personal but said it may have been spurred by what was happening at RBC Centura.
Life was going to change some for Ed and what he built, Mr. Landis said. And when he evaluated his own personal desires in life he just made this decision that hed rather be more of a producer and financial consultant himself.
Analysts questioned the timing of Mr. Hipps decision to leave.
Jeff Davis, a banking analyst at Midwest Research, a division of First Tennessee Securities Corp. in Nashville, said Royal Bank is in the process of building a substantial U.S. financial services company and Centura is a piece of that.
The company will want to bring the U.S. financial companies it has bought in the past 17 months under a unified management and investment philosophy rather than let the individual shops run autonomously, he said.
John Leonard, a banking analyst at Citigroups Salomon Smith Barney in London, said Royal Bank has already integrated the operations of another acquisition. This year it bought the Chicago mortgage company Prism Financial Corp. (now RBC Prism) and integrated it with its Security First Network Bank, and the company plans to integrate the operations and services of Tucker Anthony Sutro, which it agreed to buy this month for $645 million, into RBC Dain Rauscher.
RBC Centura, which has $4.3 billion of assets under management including $650 million in its proprietary mutual fund family was acquired to be the hub of Royal Banks small branch operations in the United States, not for its wealth management capabilities, Mr. Leonard said.
Its investment operations will probably be run through Royal Banks Toronto office, he said, and Tucker Anthony will be completely absorbed into RBC Dain Rauscher.
Royal Bank is going to take advantage of Dain Rauschers position in the market to build its wealth management business, while Tucker and Centura offer distribution points, he said.
The companys acquisition spree began in March 2000 when it bought Prism. Three months later it bought Liberty Life Insurance Co. in Greenville, S.C.