Taking a cue from U.S. banks, Royal Bank of Canada is aligning its upscale brokerage with other parts of its wealth management business.
The aim of the reorganization is to ensure that the private-client division of RBC Dominion Securities is working in sync with Royal Trust, Royal Mutual Funds, and the bank's discount brokerage, the Toronto banking company said Monday.
To oversee the changes, the bank named a senior executive from the brokerage, W. Reay Mackay, as vice chairman. His former duties as president and chief operating officer of RBC Dominion Securities were assigned to Charles M. Winograd, deputy vice chairman of the brokerage, which Royal Bank acquired 10 years ago.
Royal Bank was influenced by U.S. banks' efforts to marshal trust, investment management, and brokerage services, Mr. Mackay said.
"All we're doing is watching what happened primarily in the United States and knowing that we have to compete here in Canada," Mr. Mackay said.
The restructuring was part of a broader effort at Royal Bank to reorganize around three main lines of business: personal and commercial banking, corporate and investment banking, and wealth management. (See page 11 for a report on Royal Bank's home banking offering.)
The bank's four wealth management groups-the two brokerages, trust, and mutual funds-operate in Canada, the United States, Asia, Europe, and Latin America.
The bank also expanded last month by acquiring the U.S. private banking accounts of Credit Suisse.
Almost 8,200 people work in these units. They manage more than $29 billion in separate accounts and mutual funds, and close to $56 billion in accounts for private clients in the brokerages, RBC Dominion Securities and Royal Bank Action Direct.
The problem is that many affluent clients do business with more than one unit already but get service on accounts at different times from different places, Mr. Mackay said.
"Do you need two marketing departments working in different directions? Two back offices not necessarily talking together while working on the same types of problems?" he asked. Mr. Mackay said no layoffs are expected as a result of the changes.
"When you put them together it doesn't mean fewer people, it just means you'll have a more focused strategy where everybody is moving in the same direction," he said.
Observers applauded Royal Bank's objectives, saying such methods help retain clients.
"You want to find a clean and efficient way to bring together the breadth of capabilities so you can put out what appears to be a lower-cost custom solution for that client situation," said John Colas, managing director at Oliver Wyman & Co., a New York consulting firm.
Internal challenges remain, however. Management needs to "make sure the bankers are truly working together, rather than saying the words," said Charles B. Wendel, president of Financial Institutions Consulting.
Compensating people for internal referrals and sales can help the integration effort, he added.
Royal Bank's plan was not devised in preparation for its pending merger with Bank of Montreal, Mr. Mackay said. "This is the right structure, and if a merger takes place this will still be the right structure."