Royal Bank of Canada is seeking small- to medium-sized acquisitions, particularly in Latin America and Asia, to build its equity capabilities in global asset management, the bank’s head of wealth management said on Thursday.
“We’re very strong in North America, and globally in fixed income, so we are interested in strengthening our international equity capabilities with a particular focus on Latin America and Asia,” RBC Wealth Management group head George Lewis told Reuters in an interview.
RBC, the world’s sixth-largest wealth manager, has sought to broaden its asset management capabilities beyond its fixed income base, as well as to build outside its North American and European strongholds.
“You’ll see a primary focus from an acquisition point of view continuing in the asset manager area, perhaps more with a focus on the equities and alternatives and small- to medium-sized opportunities, given the nature of how you add capabilities in that particular area,” Mr. Lewis said.
He said an acquisition that boosts the bank’s asset management strength in Latin America or Asia is “the next logical step,” adding the bank preferred to develop exclusive deals rather than compete for assets with many bidders.
“I think our greatest chance of success of building something that meets our financial objectives, and is consistent with our strategy, is to be very pro-active and exclusive in terms of our approach,” Mr. Lewis said.
This doesn’t mean the bank won’t bid on a choice asset if competitors enter the fray, he said.
“If there were opportunities that came along that we felt were compelling, we’d obviously look at that,” Mr. Lewis said.
Mr. Lewis said he expected a better performance from wealth management in the fourth quarter compared with the third, when a lacklustre market and skittish investors left profits flat to negative at all of Canada’s big five banks.
With some $325-billion in assets under management, RBC’s wealth management unit can make or break the bank’s profit performance every quarter.
While third-quarter profit, excluding unusual items, fell 8 per cent compared with a year earlier, Mr. Lewis said the future looked brighter, given a recent improvement in global markets.
“All of our businesses are in positive net flows, in terms of net new assets, and I think that looking at what the markets have been doing over the last month or two, that will have a beneficial impact on not only our performance but (those of) our peers as well,” Mr. Lewis said.
“As client portfolios continue to recover, and we have a recovery in equity markets, where we have fee-based businesses, that will lead to natural growth. And even on the transaction side, you’d expect to see an increase in client activity as markets stabilize.”