Royal Bank of Canada Stock

Royal Bank of Canada (RBC), together with its subsidiaries, provides financial services worldwide.

The company offers its services to its 17 million clients in Canada, the U.S., and 27 other countries.

Segments

The company operates through four segments: Personal & Commercial Banking, Wealth Management, Insurance, and Capital Markets.

Personal & Commercial Banking segment

Personal & Commercial Banking segment provides a broad suite of financial products and services to individual and business clients for their day-to-day banking, investing, and financing needs through two businesses: Canadian Banking and Caribbean & U.S. Banking. In Canada, the company provides a broad suite of financial products and services through its large branch network, ATMs, and mobile sales network. In the Caribbean and the U.S., the company offers a broad range of financial products and services in targeted markets.

Strategy

The key elements of this segment's strategy are to accelerate its growth and deepen relationships; transform sales, advice, and services; expand its sustainable finance product suite for businesses; accelerate actions focused on enhancing the client experience underpinned by programs across its growth and transformation priorities, including product development and digitization; and focus on the automation of processes and controls, and the development of digital tools to enhance scalability, simplify processes and improve the client experience.

Business Lines

In Canada, the company operates through two business lines: Personal Banking and Business Banking.

Personal Banking

Personal Banking offers a full range of products focused on meeting the needs of the company's individual Canadian clients at every stage of their lives through a wide range of financing and investment products and services. This includes home equity financing, personal lending, chequing, and savings accounts, private banking, indirect lending (including auto financing), mutual funds, and self-directed brokerage accounts, GICs, credit cards, and payment products, and solutions. The company's retail banking network is the largest in Canada with branches and ATMs.

Business Banking

Business Banking offers a wide range of lending, leasing, deposit, investment, foreign exchange, cash management, auto dealer financing, trade products, and services to small- and medium-sized commercial businesses across Canada.

Caribbean and U.S. Banking

The company's Caribbean Banking business provides personal and commercial banking to a range of clients, including individuals, small businesses, general commercial entities, regional and multi-national corporations, and governments; supported by an extensive branch, ATM, online, and mobile banking network.

The company's U.S. Banking business serves the needs of Canadian retail and small business clients providing personalized, digitally-enabled cross-border banking solutions enabling a cross-border lifestyle in all 50 states across the U.S.

Wealth Management segment

This segment serves affluent, high net worth (HNW) and ultra-high net worth (UHNW) clients from its offices in key financial centres mainly in Canada, the U.S., the United Kingdom (U.K.), Europe, and Asia. The company offers a comprehensive suite of wealth, investment, trust, banking, credit, and other advice-based solutions. The company also provides asset management products to institutional and individual clients through its distribution channels and third-party distributors. The company provides financial institutions, asset managers, and asset owners with asset services and investor services.

The company's lines of business include Canadian Wealth Management, U.S. Wealth Management (including City National), Global Asset Management (GAM), International Wealth Management, and Investor Services.

Canadian Wealth Management is the largest full-service wealth advisory business in Canada, as measured by assets under administration (AUA), serving HNW and UHNW clients.

U.S. Wealth Management (including City National) encompasses its private client group (PCG) and clearing and custody (C&C) businesses. PCG is the 6th largest full-service wealth advisory firm in the U.S., as measured by AUA, and City National is a U.S.-based relationship bank serving the entertainment industry, mid-market businesses, HNW individuals, and other clients.

GAM is the largest retail mutual fund company in Canada as measured by AUM, as well as a leading institutional asset manager.

International Wealth Management serves HNW and UHNW clients, primarily through key financial centres in the U.K., Ireland, the Channel Islands, and Asia.

Strategy

The key elements of this segment's strategy are to be the premier service provider for HNW and UHNW clients; become the leading private and commercial bank and wealth manager in its key markets; become the most trusted regional private bank; and be a leading, diversified asset manager focused on global institutional and North American retail clients.

Business Lines

Canadian Wealth Management

Canadian Wealth Management includes the company's full-service Canadian wealth advisory business, which is the largest in Canada as measured by AUA, with over 2,000 investment advisors providing comprehensive financial solutions with a focus on HNW and UHNW clients. Additionally, the company provides discretionary investment management and estate and trust services to its clients through over 120 investment counsellors and over 115 trust professionals across Canada.

U.S. Wealth Management (including City National)

U.S. Wealth Management (including City National) encompasses PCG and the company's C&C businesses. PCG is the 6th largest full-service wealth advisory firm in the U.S., as measured by number of advisors, with over 2,100 financial advisors. The company's C&C business delivers clearing and execution services for small to mid-sized independent broker-dealers and registered investment advisor firms. City National provides comprehensive financial solutions to affluent individuals, entrepreneurs, professionals, their businesses and their families, and other clients who value personalized banking relationships through a high-touch service model, proactive advice, and financial solutions. City National offers a broad range of lending, deposit, cash management, equipment financing, wealth management, and other products and services. In the U.S., the company operates in a fragmented and highly competitive industry.

Global Asset Management

GAM provides global investment management services and solutions for individual and institutional investors in Canada, the U.K., the U.S., Europe, and Asia. The company provides a broad range of investment management services through mutual, pooled, and private funds, fee-based accounts and separately managed portfolios. The company distributes its investment solutions through a broad network of bank branches, its self-directed and full-service wealth advisory businesses, independent third-party advisors and private banks, and directly to individual clients. The company also provides investment solutions directly to institutional clients, including pension plans, insurance companies, corporations, endowments, and foundations.

The company is the largest retail fund company in Canada measured by AUM, as well as a leading institutional asset manager.

In the U.S., the company's asset management business offers investment management solutions and services, primarily to institutional investors, and competes with independent asset management firms, as well as those that are part of national and international banks and insurance companies.

Internationally, through the company's global capabilities distributed under the brand RBC BlueBay Asset Management, it offers investment management solutions for institutions and, through private banks, including RBC Wealth Management, to HNW and UHNW investors.

International Wealth Management

International Wealth Management includes operations in the U.K., Ireland, the Channel Islands, and Asia. The company provides customized and integrated wealth management solutions to HNW, UHNW, and corporate clients in key financial centres.

Investor Services

Investor Services delivers asset servicing solutions to Canadian and the U.K. asset managers and asset owners, investment counsellors and other financial institutions. The company's product and service offering includes custody, fund administration, shareholder services, middle office, and market services (including foreign exchange, securities finance and cash/liquidity management).

Insurance segment

This segment has operations in Canada and globally, operating under two business lines: Canadian Insurance and International Insurance, providing a wide range of advice and solutions for individual and business clients including life, health, wealth, property and casualty, travel, group benefits, annuities, and reinsurance. In Canada, the company offers its products and services through a wide variety of channels includes mobile advisors, advice centres, RBC Insurance stores, and digital platforms as well as through independent brokers and partners. Outside Canada, the company operates in reinsurance and retrocession markets globally offering life, critical illness, disability, and longevity reinsurance products.

RBC Insurance is one of the largest Canadian bank-owned insurance organizations on a total revenue basis and operates under two business lines: Canadian Insurance and International Insurance.

In Canada, the company offers life, health, travel, wealth accumulation solutions, and annuities to individuals and businesses. It also offers property and casualty insurance through a distribution agreement with Aviva Canada. The company's products and services are distributed through multiple channels, including proprietary sales force, digital platforms, and a network of independent brokers and partners.

Outside Canada, the company operates globally in the reinsurance and retrocession markets offering longevity reinsurance, life retrocession, and reinsurance for creditor life, disability, and critical illness.

Strategy

The key elements of this segment's strategy include to grow its Insurance business; develop and sustain excellence in distribution; accelerate investments in product innovation, digitization, and data; and evolve its risk culture.

Business Lines

Canadian Insurance

The company offers life, health, travel, wealth accumulation solutions, and annuities to individuals and businesses across Canada. It also offers property and casualty insurance through a distribution agreement with Aviva Canada. The company's life and health portfolio includes participating whole life, term life, critical illness, disability, and group benefits, including long-term disability, and health and dental insurance. Wealth solutions include a family of segregated funds, as well as individual annuities. Its travel products include out-of-province/country medical coverage, and trip cancellation and interruption insurance.

The company's group annuities business helps defined benefit pension plan sponsors better manage and control risk. RBC Insurance has a set of strategies and initiatives aimed at building the company's momentum and positioning it for growth in this product line, where companies are increasingly looking to transfer the risks associated with their pension obligations to insurance companies - either through group annuity contracts or longevity swap products.

As a multi-line carrier, the company offers a broad suite of solutions, increasing convenience for its clients. Many of the company's solutions hold market leadership positions, including its disability insurance, term life, and group annuity products.

International Insurance

International Insurance includes the company's reinsurance product lines, which reinsure risks of other insurance and reinsurance companies. The company offers life, health, and longevity reinsurance solutions.

Capital Markets segment

RBC Capital Markets is a premier global investment bank providing expertise in advisory and origination, sales and trading, lending, and financing and transaction banking to corporations, institutional clients, asset managers, private equity firms, and governments globally. The company's professionals provide clients with the advice, products, and services their businesses need from 60 offices in 16 countries. Its presence extends across North America, the U.K. and Europe, Australia, Asia, and other regions.

In North America, the company offers a full suite of products and services, which include equity and debt origination and distribution, advisory services, sales and trading, and transaction banking. In Canada, it is a market leader with a strategic presence in all lines of capital markets businesses. In the U.S., the company has a full industry sector coverage and investment banking product range, as well as capabilities in credit, secured lending, municipal finance, fixed income, currencies and commodities, and equities.

Outside North America, the company has a targeted strategic presence in the U.K. and Europe, Australia, Asia, and other markets aligned to its global expertise. In the U.K. and Europe, the company offers a diversified set of capabilities in key industry sectors of focus.

Strategy

The key elements of this segment's strategy are to grow and deepen client relationships; lead with advice and extend capabilities; leverage digital and data to deliver innovative solutions; prioritize and align for impact; and drive agility and ease of doing business.

Business lines

The company operates two main business lines, Corporate and Investment Banking and Global Markets.

Corporate and Investment Banking

Corporate and Investment Banking includes the company's corporate lending, municipal finance, loan syndication, debt and equity origination, M&A advisory services, and transaction banking services.

Global Markets

Global Markets comprises the company's sales and trading businesses, including fixed income, foreign exchange, commodities, and equities, as well as its repo and secured financing products.

Other

Other includes the company's legacy portfolio, which mainly consists of its U.S. commercial mortgage-backed securities (MBS), bank-owned life insurance (BOLI) derivative contracts, and structured rates in Asia.

Seasonality

The first quarter (year ended October 2023) has historically been stronger for the company's Capital Markets businesses. The second quarter has fewer days than the other quarters, which generally results in a decrease in net interest income and certain expense items. The third and fourth quarters include the summer months, which generally results in lower client activity and may negatively impact the results of its Capital Markets trading business.

Trademarks

The company's trademarks include the RBC LION & GLOBE Design, ROYAL BANK OF CANADA, RBC, RBC Insurance, RBC Investor Services, and Leo LRCN Limited Recourse Trust.

Government Regulation and Supervision - Canada

The company is a 'Schedule I' bank under the Bank Act (Canada) (Bank Act), and as such, is a federally regulated financial institution. It has Canadian insurance and trust and loan company subsidiaries that are also federally regulated financial institutions (FRFI Subsidiaries, and together with the bank, FRFIs) governed by (respectively) the Insurance Companies Act (Canada) and the Trust and Loan Companies Act (Canada).

The Office of the Superintendent of Financial Institutions (OSFI), an independent agency of the Government of Canada, reports to the Minister of Finance (the Minister) for the supervision of the FRFIs.

The company and the following subsidiaries are member institutions of the Canada Deposit Insurance Corporation (CDIC): Royal Trust Corporation of Canada, The Royal Trust Company, Royal Bank Mortgage Corporation, and RBC Investor Services Trust. Under the Bank Act, the company is prohibited from engaging in or carrying on any business other than the business of banking, except as permitted under that statute.

The activities of certain of the company's subsidiaries, such as RBC Dominion Securities Inc. (RBC DS), RBC Direct Investing Inc. (RBC DI), Royal Mutual Funds Inc. (RMFI), RBC Global Asset Management Inc., Phillips, Hager & North Investment Funds Ltd. (PH&N IF), RBC Phillips, Hager & North Investment Counsel Inc. and RBC InvestEase Inc., which act as securities dealers (including investment dealers, mutual fund dealers and exempt market dealers), advisors (portfolio manager) or investment fund managers are regulated in Canada under provincial and territorial securities laws (which are administered and enforced by the applicable securities regulatory authorities) and, for investment dealers and mutual fund dealers, by the rules of the applicable self-regulatory organization (the New Self-Regulatory Organization of Canada (New SRO) formed by the amalgamation of the Investment Industry Regulatory Organization of Canada and the Mutual Fund Dealers Association of Canada (MFDA) effective January 1, 2023 and renamed the Canadian Investment Regulatory Organization (CIRO) on June 1, 2023). Each of RBC DS, RBC DI, RMFI and PH&N IF are members of the Canadian Investor Protection Fund.

The activities of the company's regulated Canadian insurance subsidiaries, RBC Life Insurance Company (RBC Life) and RBC Insurance Company of Canada (RICC), are federally governed by the Insurance Companies Act and by provincial legislation in each province and territory in which they carry on business.

Additionally, and subject to applicable restrictions under the Bank Act, RBC Wealth Management Financial Services Inc., a wholly owned indirect subsidiary of the company, is licensed under applicable provincial and territorial laws to sell insurance products, including individual and group life and living benefits insurance along with money products such as annuities and segregated funds, for both related and independent insurance companies in Canada.

Government Regulation and Supervision - the United States

Under the International Banking Act of 1978, as amended (IBA) and the Bank Holding Company Act of 1956, as amended (BHCA), all of the company's U.S. banking operations are subject to supervision and regulation by the Board of Governors of the Federal Reserve System (Federal Reserve).

Regulation YY (Enhanced Prudential Standards for Foreign Banking Organizations) required the company to establish an intermediate holding company (IHC) organized under the U.S. law. The company fulfills its Regulation YY regulatory requirements through RIHC, which include capital adequacy, capital planning and stress testing, risk management and governance, liquidity and liquidity stress testing, financial regulatory reporting and other requirements that are similar to, or the same as, those applicable to the U.S. domestic BHCs that are similarly categorized under the rules that tailor enhanced prudential standards for FBOs and large U.S. banking organizations. In addition, the bank is registered as a 'Swap Dealer' with the U.S. Commodity Futures Trading Commission (CFTC) and the National Futures Association (NFA) and as a 'Security-Based Swap Dealer' with the U.S. Securities and Exchange Commission (SEC).

The company maintains branches in New York that are licensed and supervised as full federal branches with fiduciary licenses by the Office of the Comptroller of the Currency (OCC), the U.S. supervisor of national banks.

The OCC examines and supervises the company's U.S. branch office/agency's activities and operations. In addition, the company's U.S. branches are required to maintain a capital equivalency deposit in their state(s) of residence, which deposits are pledged to the OCC.

Banking activities are also conducted at City National Bank (CNB) and RBC Bank (Georgia), National Association (RBC Bank), both of which are national banking associations chartered by the OCC. CNB and RBC Bank are members of the Federal Reserve. Deposits at CNB and RBC Bank are Federal Deposit Insurance Corporation (FDIC) insured to the extent applicable. CNB and RBC Bank are also required to comply with applicable consumer protection laws and regulations, such as those promulgated by the Consumer Financial Protection Bureau, an independent agency created under the Dodd-Frank Act. As an OCC chartered U.S. national bank, CNB also has fiduciary powers and offers trust and investment management services.

CNB also conducts trust and investment management activities through CNB's wholly-owned subsidiary, RBC Trust Company (Delaware) Limited (RBC Trust). RBC Trust is a Delaware trust company chartered and supervised by the Delaware State Banking Commission and, as a BHC subsidiary, is subject to oversight by the Federal Reserve.

The securities brokerage, trading and investment banking activities are conducted by and through the following U.S.-registered broker-dealer subsidiaries, such as RBC Capital Markets, LLC (RBC CM LLC), RBC CMA LLC, City National Securities, Inc., CNR Securities, LLC (formerly RIM Securities LLC), and Symphonic Securities LLC. The SEC, state securities regulators, the Financial Industry Regulatory Authority and other self-regulatory organizations regulate these broker-dealer subsidiaries. Certain activities of RBC CM LLC and RBC CMA LLC are also subject to regulation by the CFTC and the NFA. Pursuant to the Dodd-Frank Act, RBC CM LLC is registered as a Swaps Firm with the NFA. Certain activities of RBC CM LLC are subject to regulation by the Municipal Securities Rulemaking Board.

The company's New York branches have fiduciary powers, under which these branches conduct investment management and custody activities for certain customers. In addition, other affiliates are involved in the business of investment management. In many cases, these activities require that the affiliates be registered with the SEC as investment advisers under the U.S. Investment Advisers Act of 1940, as amended (Advisers Act).

The following entities are the company's subsidiaries that are registered as 'investment advisers' with the SEC, such as RBC CM LLC, RBC Global Asset Management (U.S.) Inc. (GAM), RBC Global Asset Management (UK) Limited (GAM UK), RBC Private Counsel (USA) Inc., City National Rochdale, LLC (CNR), City National Securities, Inc., and Symphonic Financial Advisors LLC.

GAM and CNR also each sponsor and act as the adviser to the U.S. mutual funds. The U.S. Investment Company Act of 1940, as amended, and related rules regulate the registration and operation of mutual funds and certain activities of the funds' advisers and other affiliates and certain of the funds' other service providers. Certain activities of GAM UK and GAM are also subject to regulation by the CFTC and the NFA.

History

The company was founded in 1864. It was incorporated under the 'Act to Incorporate the Merchants' Bank of Halifax' in 1869. The company was formerly known as Merchants Bank and changed its name to The Royal Bank of Canada in 1901. Further, the company changed its name to Royal Bank of Canada in 1990.