On Doug McGregor’s 11-year watch as chief executive, RBC Capital Markets grew from a regional player into a leading global investment bank, navigating storms that swept away far larger institutions.
As the 63-year-old announced plans on Wednesday to retire in January, Mr. McGregor predicted his successors will continue to expand Royal Bank of Canada’s capital-markets franchise, due to a combination of the firm’s strong culture and its ability to overcome the structural issues that continue to bedevil many international rivals. Derek Neldner, aged 46 and currently global head of investment banking, will take over as CEO of RBC Capital Markets in the new year.
“We did it the right way, we were careful, every step of the way, and we were fortunate to avoid major mistakes,” Mr. McGregor said in an interview. Over a decade, the investment dealer more than doubled its revenues, from $3.9-billion to $8.4-billion in 2018, while assets increased from $340-billion to $576-billion. RBC shareholders earned a 12-per-cent average annual return from the capital-markets business over the past 10 years, which the bank says is the best performance of any global financial institution.
Mr. McGregor joined RBC in 1983 and took the top job at the investment dealer in 2008, in the midst of the global financial crisis. Most banks were forced to retrench at the time, but Canadian banks came through the downturn with relatively strong balance sheets. Mr. McGregor saw an opportunity for Toronto-based RBC to build client relationships, put capital to work and hire professionals in New York, London, Sydney and other international centres. However, the firm shied away from significant acquisitions, a growth strategy that Mr. McGregor said typically creates culture clashes at investment banks.
Looking ahead, Mr. McGregor said a number of European banks, including Deutsche Bank, are expected to continue exiting capital markets and that will create opportunities for RBC to expand. He said: “The challenge is to keep building on our momentum and to keep managing the risks that come with investing globally, and Derek is more than ready for that challenge.”
In a reflective moment for an executive who, by his own admission, is seldom given to introspection, Mr. McGregor said his only regrets in 37 years with RBC are “I didn’t have a little more fun along the way, and didn’t spend more time talking to the younger people at the firm.” He said deal-making and trading, by definition, force executives to jump from one transaction to the next. As he contemplates the end of his career, Mr. McGregor said what he values most are memories of time with clients and colleagues.
Long-time clients said Mr. McGregor’s strength is balancing the needs of Royal Bank with its customers’ demands for loans and other support. “Doug is always about protecting the bank, but even when he said ‘no’ on a deal, it was always ‘no, but we can do this,’” said Jon Love, CEO of real estate firm KingSett Capital Inc., who estimates he’s done “tens of billions of dollars worth of business” with RBC.
“Doug is clear, he’s decisive and he’s loyal, and he’s got a tremendous customer focus,” Mr. Love said. “Of all the people I ever need to talk to over the course of the day, Doug is by far the easiest to reach.”
Mr. McGregor is a graduate of the University of Western Ontario’s MBA program and former varsity wrestler who started his career in 1979 on an equity-sales desk, then moved to real estate banking in 1983 at a division of RBC. “I never thought I would work for a bank,” Mr. McGregor said on Wednesday. “Frankly, I never put much thought into my career.” RBC Capital Markets’ CEO also said he has put little thought into retirement plans, but will likely keep busy in real estate as either an investor or an adviser to property companies.
RBC, like most public companies, tries to align the interests of shareholders and management by paying the executives a significant amount of compensation in the form of shares. Regulatory filings this spring showed Mr. McGregor owned a stake worth $73-million, nearly three times the holding of RBC CEO Dave McKay, who also joined the bank in 1983. Among active executives at Canada’s big banks, only Toronto-Dominion Bank CEO Bharat Masrani and TD Securities Inc. boss Bob Dorrance owned larger stakes, worth $76-million and $99-million respectively.
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