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RBC to Buy City National, Boost U.S. Wealth Operations

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Royal Bank of Canada, or RBC, has moved to purchase City National Bank (CYN), known as “the bank to the stars” thanks to its ties to Hollywood, for some $5.4 billion.

“City National serves high net worth and commercial client segments in select high-growth markets, and represents a unique opportunity to complement and enhance our existing U.S. businesses and product offering,” said RBC Chief Executive Dave McKay, in a statement on Thursday.

City National has total assets of $32.6 billion and offices in five states, while RBC’s current wealth management operations in the United States some $280 billion in assets under administration and about 2,000 advisors. RBC Wealth includes RIA custody and broker-dealer clearing businesses.

“City National’s private banking and wealth management capabilities will enable us to offer a broader product suite to the 340,000 U.S. households served by our U.S. Wealth Management unit,” McKay explained.

Following the closing of the deal, RBC plans to combine its U.S. Wealth Management unit with City National. These operations will be led by City National Chairman and CEO Russell Goldsmith, who has served as City National’s CEO since 1995.

“We’re very enthused about merging with RBC,” Goldsmith said in a press release. “This combination is a compelling opportunity … My colleagues and I look forward to joining forces with this company that has tremendous financial strength and considerable resources and capabilities not only in the United States but around the world.”

RBC, which has some 8,000 employees in the U.S., acquired the brokerage and investment banking firm Dain Rauscher Wessels of Minneapolis in 2000. In mid-2012, Canada’s biggest bank acquired J.P. Morgan Investment Advisor Services, the high-end RIA custody and clearing business that JPMorgan picked up through its purchase of Bear Stearns in early 2008.

RBC also bought Britain’s BlueBay Asset Management in 2010, and in 2012 sold its U.S. banking business to PNC Financial Services for close to $3.5 billion.

This week’s deal “will deepen [RBC’s] penetration in U.S. wealth management and broaden its geographic exposure, particularly in California,” according to Barclays analyst John Aiken.

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