Royal Bank of Canada

Financial services companies of Canada

RBC provides personal and commercial banking, wealth management services, insurance, corporate, investment banking and transaction processing services on a global basis. RBC employs more than 70,000 full and part-time employees who serve more than 15 million personal, business, public sector and institutional clients through offices in Canada, the U.S. and 46 other countries.

RBC holds strong market positions in its five business segments:

Canadian Banking
Wealth Management
International Banking
Capital Markets
Insurance

1864 - 1887

The Wharves of Halifax

Merchant Bank of Halifax
First offices of Merchants’ Bank of Halifax on Bedford Row, 1869

The Merchants Bank was founded as a private commercial bank in 1864 by a close-knit group of Haligonian merchants. The bank’s first office on Bedford Row was situated within sight of the busy wharves of Halifax. Focusing on the financing of fishing and timber as well as the annual flow of retail goods from Europe into the colony, the Merchants Bank was closer linked to England and the Caribbean in its early operations than it was to the heartland of the North American continent.

Confederation brought new perspectives. It also brought the necessity of a federal charter, which was obtained in 1869 under the name of the Merchants’ Bank of Halifax. During the 1870s and 1880s the bank expanded into its Maritime hinterland by adding representation in Nova Scotia and establishing its presence in both Prince Edward Island and New Brunswick. At the same time it pursued the possibilities of international trade, opening an agency in Bermuda in 1882.

1887 - 1914

Towards the Continental Divide

Emblem, 1901
Royal Bank of Canada emblem, 1901

Inspired by the bank’s general manager and later managing director, Edson Pease, the Merchants’ Bank pursued a strategy of securing a leading role in the corporate financial affairs of Montreal. The opening of a branch in Montreal in 1887, then the hub of Canadian finance, exemplified the bank’s shift from a colonial perspective to a continental strategy.

Beginning in the 1890s the bank’s branches were pushed out to the furthest reaches of national development as branches began to dot British Columbia and, one decade later, Manitoba and Saskatchewan and Alberta.

The scope of this transformation forced changes to the bank’s image and structure. The Board of Directors shed the old Merchants’ Bank of Halifax title in favour of the “more comprehensive” The Royal Bank of Canada in 1901. Symbolizing the bank’s coming of national age, its head office was moved to Montreal in 1907 and a new head office building was built at 147 St. James Street one year later.

1899 - 1920

The Seas Beyond: International Expansion

Bridgetown, Barbados Branch
Bridgetown, Barbados branch, early 1950s

Early expertise in commodity trade financing opened the way to participation in the lucrative trade in sugar, cocoa, tobacco and other staples of Caribbean production. The establishment of a branch in Havana in 1899 set the pattern for the steady expansion of Royal Bank throughout the Caribbean and Latin America over the next twenty-five years. By 1925, the bank boasted 121 international branches, stretching from Rio de Janeiro in the south to Honduras in Central America.

As an adjunct to this array of southern branches, Royal Bank branches and agencies were established in key centres of North American and European finance. Branches in London, Paris, Barcelona and New York all served to secure the other end of trade financing and foreign exchange with the Caribbean and South America. In 1919, an attempt was made to sustain a branch in Vladivostok in revolutionary Russia.

1910 - 1925

Filling in the Map: Growth by Amalgamation

The outright purchase of another bank - usually in exchange for Royal Bank stock - gave Royal Bank instant access to new territory and a much needed additional pool of trained staff.

Beginning in 1910 with the Union Bank of Halifax, the process continued through the acquisition of the Traders Bank of Canada (1912), the Quebec Bank (1917), the Northern Crown Bank (1918) and finally the Union Bank of Canada in 1925.

More than anything else, these acquisitions vaulted Royal Bank over its competitors and made it Canada’s largest bank by the mid-1920s with 668 branches and a staff of 8,500.

1920 - 1939

Banking Doldrums: Sagging Profits and Credibility

Weak national growth in the early 1920s and the global economic collapse of the 1930s hit Canadian banking hard. Amid these pressures, tight lending policies and branch closures helped to shore up the banks’ financial position, but for the nation as a whole it had a deflationary effect and generated ill will towards the banking system. For the first time the banks also faced a credibility crisis as politicians and the general public - especially in the West - began to view the banks as economic impediments. Under Morris Wilson, president from 1934-1946, Royal Bank rebuilt both its credibility and its assets. An event of importance was the May 1928 move of the bank’s head office from 147 St. James Street to the newly constructed and more accommodating 360 St. James Street building - then the tallest standing structure in the British Empire.

1939 - 1960

War and Peace: Banking in a Keynesian World

The surge of war-induced prosperity restored vigour to national banking. Royal Bank actively financed wartime production of everything from aircraft to aluminium. As victory loomed, the bank joined the government’s efforts to ensure that there would be no post-war return to depression. The 1944 revision of the Bank Act opened the way to a new range of consumer and farmer loans. As it had in the First World War, the bank handled the floatation of millions of dollars worth of Victory bonds. In a sense, the banks had become partners in growth with the federal government.

The “baby boom” years saw Royal Bank serve as a facilitator of headlong national growth. The “R-Oil” won a reputation as the first bank into the Alberta oil patch. After 1954, when the banks were permitted to carry new home mortgages, Royal Bank quickly led the industry as the home buyers’ preferred lender. Under the direction of James Muir, the bank’s hard-nosed president through 1949-1960, the bank built up its corporate accounts in Canadian industrial and resource development projects.

1960 - 1979

Onto the Global Stage: The 1960s and the End of Parochialism

The prosperity of the 1950s served the bank well in the next decade. Under the leadership of Earle McLaughlin, from 1960-1979, Royal Bank adopted a new decentralized approach to change; new products and training procedures were developed. Traditional bank services broadened dramatically thus creating pressure for a new generation of bank employees. By the late 1960s, the staid world of banking was slowly crumbling and evidence of these changes began to reach the branches: increasing opportunities for women in management positions, Chargex/Visa*, personal chequing accounts, an array of personal loans, broadened mortgage plans and, in 1972, automated banking machines.

Royal Bank’s presence abroad was indicative of the gradual erosion of the national expansion of the Canadian banking system. Operating in over 50 countries by the early 1980s with operations from London to Beijing, the bank once again, as it had at the turn-of-the-century, shifted to accommodate the imperatives of national and international economic change.

1980 - 1995

Meeting the Challenges of Global Banking

Earle McLaughlin’s 1979 retirement coincided with the advent of a decade of fundamental change for Canadian banking. Under the chairmanship of Rowland Frazee (1980-1986), the bank faced the challenge of sharp economic recession, unprecedented high interest rates and, as an international consequence of these last two factors, severe debt problems in the developing world. At the same time, a process of national and global financial deregulation began to break down the traditional lines of demarcation in finance. Canada’s “big bang” came in 1986 when the age-old four pillars of Canadian finance were exposed to the first shocks of a deregulated financial marketplace. Bankers were obliged to learn new skills and occupy new roles at a pace quite out of keeping with the traditional stately pace at which the Canadian banking system had evolved since the 1871 Bank Act. Such changes quickly altered the face of world banking; once among the world’s largest, Canadian banks soon found themselves competing with huge new international banks.

Royal Bank met these challenges with characteristic boldness. Under Allan Taylor (1986-1995), the bank moved closer to becoming a fully integrated financial services group and responded with a variety of new services to better serve an increasingly fragmented and competitive marketplace. Dominion Securities, Voyageur Insurance Company and Royal Trust were added to the “family” and increased revenue generation from both traditional and emerging businesses paved the way for a strong future. On the international front, the worrisome LDC debt problems of the early 1980s were overcome and the bank rethought its international orientation to emphasize services for its multinational corporate clients. Carrying on a long-standing tradition, the bank’s commitment to corporate social responsibility reached a new plateau as annual charitable donations grew to $25.5 million in 1999, one of the largest philanthropic budgets of any Canadian corporation.

1995 - Present

Building a North American Identity

Under the leadership of John E. Cleghorn (1995-2001), Royal Bank completed its transformation from a traditional commercial bank to a broad-based financial services group. Supported by a responsive and flexible management structure and with a solid foundation in place, the forces of change were met with strong performance from traditional businesses, growth in new marketplaces and the pursuit of technology-based delivery channels. Key acquisitions added scale to core businesses as exemplified by the purchases of Westbury Canadian Life Insurance Company, the Canadian operations of Mutual of Omaha, the Canadian life and annuity business of Prudential of America and investment dealer Richardson Greenshields. Strategic alliances were struck with innovative technology partners, such as AOL Canada Inc., to satisfy clients’ growing appetite for e-banking alternatives.

The listing of common shares on the New York Stock Exchange in 1995 confirmed Royal Bank’s desire for a stronger U.S. presence. As part of the initial development of a U.S. retail banking platform Security First Network Bank, the world’s first Internet bank, was acquired to leverage a broader range of e-business services. Subsequent purchases of Prism Financial Corporation, Liberty Life and Liberty Life Insurance, Dain Rauscher Corporation, Centura Banks and Tucker Anthony Sutro have greatly enhanced Royal Bank’s U.S. retail banking, full-service brokerage and insurance operations.
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Demonstrating its traditional flexibility and responsiveness to market demand, Royal Bank separated the role of chairman from that of chief executive officer upon the retirement of John Cleghorn. On August 1, 2001, Guy Saint-Pierre assumed the role of chairman of the board and Gordon M. Nixon became president and chief executive officer. To support Royal Bank’s evolving North American presence, a new global brand strategy was launched under the RBC Financial Group banner in which the RBC prefix was added to each business platform and operating subsidiary.

In the face of dramatic changes and challenges, Royal Bank has maintained the entrepreneurial spirit of its Halifax founders, with dedicated people working together to create client and shareholder value. In the social arena, employees continue to participate in their communities and speak responsibly on issues that impact North Americans and reflect the financial services industry’s concern for providing clients with the best possible services.

Canada Business Directory @ January 17, 2009