Royal Bank of Canada has announced that it will be buying City National Corp. for $5.4 billion to grow its wealth management business in the United States. This will be RBC’s biggest takeover ever.
RBC CEO Dave McKay, who took his position in August, told the Financial Post that this combination creates a powerful expansion platform for a focused long-term growth in the U.S. He said RBC views the U.S. as its second home market.
McKay says Canada’s largest commercial bank currently has about 340,000 U.S. households as clients of its wealth management arm and City National will enable the bank to offer broader range of financial products.
The head of City National will remain with the company and will also be responsible for RBC’s wealth management business in the United States.
If the deal goes through, City National shareholders would get the equivalent of $93.80 US per share – roughly 50 per cent in cash and the other half in RBC shares.
The deal still requires various approvals from regulators and City National shareholders.