Profile: Royal Bank of Canada (RY.TO)
Royal Bank of Canada (RBC) is a diversified financial services company. RBC provides personal and commercial banking, wealth management services, insurance, corporate and investment banking and transaction processing services on a global basis. Its International Banking segment includes its banking businesses in the United States and Caribbean, as well as its 50% interest in RBC Dexia Investor Services (RBC Dexia IS). RBC Bank in the United States provides a line of products and services through 426 banking centers and approximately 480 automatic teller machines (ATMs). RBC provides customized trust, banking, credit and investment solutions to clients in 21 countries worldwide. In July 2012, it acquired 50% stake of RBC Dexia Investor Services Limited from Banque Internationale a Luxembourg S.A. In February 2013, it acquired the Canadian automotive finance and deposit business of Ally Financial Inc. In April 2013, it acquired Athena Energy Group of Cos.
RBC’s financial instruments include hedge fund investments with certain redemption restrictions, certain structured debt securities (asset-backed securities (ABS), including Collateralized Loan Obligations and collateralized debt obligations (CDOs), auction-rate securities (ARS) and the United States Non-agency MBS), non- Co-operation and Development (OECD)) government and corporate debt with long-dated maturities and unobservable spreads, derivatives referenced to the performance of certain CDOs , commodity derivatives, equity-linked and interest-rate-linked structured notes, and deposit notes with long-dated maturities and unobservable spreads. ABS mainly consists of the United States insured and uninsured student loans the United States ARS, CDOs and securities backed by credit card receivables. Corporate and other debt mainly includes certificate of deposits, corporate debt and bonds, Non- OECD government securities, tender option bonds and hybrid instruments.
The Non-OECD government securities primarily relate to Caribbean countries. The principal collateral and other credit enhancements it holds as security for retail loans include mortgage insurance, mortgages over residential real estate and properties, and recourse to the personal assets being financed, such as automobiles, as well as personal guarantees, term deposits and securities. For wholesale loans include recourse to business assets, such as real estate, equipment, inventory, accounts receivable, intangible assets and securities, and recourse to the commercial real estate properties being financed. During fiscal 2010, it expanded its retail insurance network to 52 branches, providing clients with more access to insurance services. RBC serves close to 18 million personal, business, public sector and institutional clients through offices in Canada, the United States and 50 other countries.
Personal Financial Services provides a range of financing and investment products and services, including home equity financing, personal lending, deposit accounts, mutual funds and self-directed brokerage accounts, GICs and Canadian private banking. The Company’s retail banking network in Canada has 1,209 branches and 4,227 ATMs. Business Financial Services offers a range of lending, leasing, deposit, investment, foreign exchange, cash management and trade products and services to small-and medium-sized businesses and commercial, agriculture and agribusiness clients across Canada. The Company’s business banking network includes over 100 business banking centers and over 2,000 business account managers. Cards and Payment Solutions provide a range of customized credit cards and related payment products and solutions.
RBC has over six million credit card accounts. In addition, this business line includes its 50% interest in Moneris Solutions, Inc., which is RBC’s merchant card processing joint venture with the Bank of Montreal.
Wealth Management consists of Canadian Wealth Management, the United States and International Wealth Management and Global Asset Management. The Company serves clients in Canada, the United States, Europe, Asia and Latin America with a full suite of investment, trust and other wealth management solutions. RBC also provides asset management products and services through other RBC distribution channels and third-party distributors, and directly to institutional and individual clients. Canadian Wealth Management includes RBC’s full-service Canadian brokerage with close to 1,440 investment advisors providing advice-based, a range of financial solutions to clients. In addition, it provides investment management and estate and trust services to its clients through close to 60 investment counsellors and more than 120 trust professionals in locations across Canada.
The United States and International Wealth Management includes full-service brokerage firms in the United States, with more than 2,100 financial consultants. It also operates a clearing and execution services business that serves small to mid-sized independent broker-dealers and institutions. Internationally, RBC provides customized trust, banking, credit, and investment solutions to private clients with over 2,400 employees across a network of 27 offices located in 18 countries worldwide. There are approximately 5,000 registered broker-dealers in the United States, consisting of independent, regional and global players. Global Asset Management consists of its asset management business. It provides a range of investment management services through mutual and pooled funds, fee-based accounts and separately managed portfolios. RBC distributes its investment solutions through a range of network of its bank branches, its discount and full-service brokerage businesses, independent advisors and directly to consumers. RBC also provides investment solutions directly to institutional clients, including pension plans, endowments and foundations.
Insurance consists of Canadian Insurance, the United States Insurance, and International and Other. In Canada, RBC offers its products and services through its growing channels, including retail insurance branches, call centers, and its career sales force, as well as through independent insurance advisors and travel agencies. Outside North America, it operates in reinsurance markets globally. RBC offers life and health, property and casualty insurance products, as well as wealth accumulation solutions, to individual and group clients across Canada. The Company’s life and health portfolio includes universal life, critical illness, disability, long-term care insurance and group benefits. It offers a range of property and casualty products, including home, auto and travel insurance. RBC’s travel products include out of province/country medical coverage, trip cancellation insurance and interruption insurance. The Company also offers commercial insurance through its partnership with Aon Reed Stenhouse Inc.
During fiscal 2010, RBC offered life and health insurance, annuities and travel insurance to clients across the United States. Life and health products include term, indexed universal life, whole life, accidental death and critical illness protection. It also offered traditional fixed and fixed-indexed annuities. Travel insurance products include trip cancellation, interruption insurance and emergency medical coverage. International and Other Insurance is primarily consists of its Reinsurance businesses, which insure risks of other international insurance and reinsurance companies. RBC offers life and health, accident, annuity and trade credit reinsurance products.
International Banking consists of RBC’s Banking and its joint venture, RBC Dexia IS. Banking includes its banking businesses in the United States and Caribbean, which offers a range of financial products and services to individuals, business clients and public institutions in their respective markets. RBC Dexia IS offers an integrated suite of products to institutional investors worldwide. Banking consists of its banking operations in the United States and Caribbean. Its United States banking business provides a complete line of banking products and services through 426 banking centers, 476 ATMs and online banking. RBC’s Caribbean banking business offers a suite of banking products and services, as well as international financing and trade promotion services through a range of branch and ATM network, and online banking. RBC Dexia IS, of which it has a 50% ownership interest, offers global custody, fund and pension administration, securities lending, shareholder services, analytics and other related services to institutional investors.
Capital Markets consists of RBC’s global wholesale banking businesses providing corporate, public sector and institutional clients with a range of products and services. In North America, it offers a full suite of products and service capabilities. Outside North America, it has a diversified set of global capabilities, which includes fixed income origination and distribution, structuring and trading, foreign exchange, commodities and investment banking. Capital Markets is consists of two primary businesses: Capital Markets Sales and Trading and Corporate and Investment Banking. Capital Markets Sales and Trading consists of its trading and distribution operations related to fixed income, foreign exchange, equities, commodities and derivative products for institutional, public sector and corporate clients and its trading operations. Corporate and Investment Banking consists of RBC’s investment banking, debt and equity origination, advisory services, corporate lending, private equity, and client securitization businesses. It also includes its global credit business, which oversees the management of its lending portfolios and global financial institutions business. The Company’s Research group offers economic and securities research to institutional and retail clients globally.
RBC periodically securitizes its credit card receivables, residential mortgage loans and it participates in bond securitization primarily to diversify its funding sources. The Company also securitizes residential and commercial mortgage loans for sales and trading activities. It originates and sells the United States residential mortgage loans into the secondary mortgage market to issuers or guarantors of mortgage-backed securities (MBS). The Company participates in bond securitizations activities where it purchases government, government-related and corporate bonds, and repackage those bonds in participation certificates.
Variable interest entities (VIEs)
The Company administers six multi-seller, asset-backed commercial paper conduit programs (multi-seller conduits). These conduits primarily purchase financial assets from clients and finance those purchases by issuing asset-backed commercial paper. It clients primarily utilize multi-seller conduits to diversify their financing sources. The Company holds variable interests in third-party, asset-backed security conduits primarily through providing liquidity support and credit enhancement facilities. It enters into fee-based equity derivative transactions with third parties, including mutual funds, unit investment trusts and other investment funds. RBC uses compensation trusts, which primarily hold its own common shares. RBC securitizes a portion of its credit card receivables through a SPE. The Company securitizes insured Canadian residential mortgage loans through the creation of MBS pools under the NHA MBS program.
Royal Bank of Canada
Royal Bank Plaza, 200 Bay Street
TORONTO ON M5J 2J5