Less is more for the U.S. businesses of Canada's biggest bank, Royal Bank of Canada.
In the last three years, U.S. senior vice president and general manager David L. Robertson has reduced the bank's corporate client base to about 685 from 1,500.
At the same time, he has reduced the bank's staff to 217 from 415, even as the bank has added an asset-backed securities business, a syndication distribution business, and a structured finance team.
And Mr. Robertson is not done. He plans to reduce the number of corporate clients even further in 1996, to 600, focusing on multinational companies that present the greatest opportunities for the bank.
In conjunction with its investment banking affiliate Dominion Securities, Royal Bank has been building its expertise in various capital markets arenas, hoping to develop a critical mass of business to justify doing business with each customer.
"We want to be able to deliver at least three or four main products to each of our clients," said the 53-year-old Mr. Robertson.
The bank also hopes to find companies that have subsidiaries in Canada, where it can provide a branch network and services ranging from payroll to cash management.
The strategy has worked so far, with fewer customers accounting for more revenues.
Mr. Robertson estimated that revenues from U.S.-based banking had reached 10% to 12% of gross revenues, up from about 8% three years ago when he took over the U.S. operations.
Some of that increased profitability can be attributed to growth in specific business lines.
"We've more than trebled the amount of foreign exchange and capital markets derivatives that we deliver to the remaining clients," said Mr. Robertson.
The key products Royal Bank is looking to deliver include trade finance, syndicated loans and standby lines of credit, foreign exchange, capital markets derivatives, and equity derivatives.
To that end, Dominion Securities last year added 20 former Kidder Peabody equity derivatives traders to its staff.
Additionally, this fall the bank raised its profile among U.S. investors by listing its stock on the New York Stock Exchange.
Mr. Robertson said the listing was "a first step," as the bank continues to view the United States as an area for expansion in such areas as retail banking, fund management, and regional investment banking.
While the New York Stock Exchange listing presents an opportunity for an acquisition, it's not something the bank considers practical right now. "You see what everyone wants to pay to buy banks these days?" Mr. Robertson asked.
Down the road, Mr. Robertson said, the United States presents an ideal area for expansion, especially as laws like the Depression-era Glass- Steagall Act and the Bank Holding Company Act change.
"If you look at North America and at the North American Free Trade Agreement, (a strategic acquisition) would be a natural expansion for us," he said.
The Royal Bank executive said that a focused strategy is the right approach in a foreign marketplace.
Indeed, Mr. Robertson, who has been with the bank for 36 years, has done three stints outside Canada, including one in London, and articulated the need for targeted competition.
"You can't compete with Natwest or Barclays on the ground in England and really make any money," said Mr. Robertson. "When you're outside the country, you have to try to deliver certain things you can do profitably."
The Royal Bank favors profitability over size.
With about a $6 billion-asset base in the United States, the bank has the smallest amount of American assets among Canadian banks.
"We're not chasing assets," said Mr. Robertson. "We concentrate on products, and if it results in assets, that's fine."
