Royal Bank of Canada's asset management arm has promoted two of its senior executives to the roles of co-CEOs. Damon Williams and Alex Khein will take over the top job at RBC Global Asset Management (RBC GAM), effective May 1, 2015, from RBC GAM CEO John Montalbano, who becomes vice-chairman of RBC Wealth Management.
Both Mr. Williams and Mr. Khein came to RBC through acquisitions of their employers. Mr. Williams became an RBC employee when the bank bought Phillips Hager & North Investment Management in 2008. From 2009 onwards, he ran RBC GAM's institutional business globally, and was president of PH&N.
Similarly, when RBC bought BlueBay Asset Management in 2010, they acquired Mr. Khein, who had held the chief operating officer position at BlueBay since 2009. Mr. Khein became CEO and partner of BlueBay at the start of this year.
They take over at an important time for the business. RBC believes the credit boom is coming to an end, that means clients will be much more inclined to save and invest.
To meet these needs, the bank is keen on expanding its equity and alternative asset investment options. Currently 55 per cent of the arm's assets under management are in fixed-income products – largely because BlueBay specialized in fixed-income.
The global asset management arm is also expanding outside Canada, continuing a massive shift over the past seven years. In 2007, all of RBC's assets under management came from its home market, and they all belonged to retail investors. Today 33 per cent come from abroad, and roughly one-fifth of total AUM comes from Canadian institutional clients.
Global asset management is also important to the bank because it's a high-margin business, with 50 per cent pre-tax margins. "It's why we are intent on continuing to grow it," said George Lewis, group head, RBC Wealth Management & RBC Insurance, on the bank's last quarterly call.
As vice-chairman of RBC Wealth Management, Mr. Montalbano will advise Mr. Williams and Mr. Khein regarding business development and mergers & acquisitions activities.
All three executives will be reporting to Mr. Lewis. Mr. Williams will be working out of Vancouver, while Mr. Khein will be based in London.
"[Mr. Montalbano] has had an exceptional tenure as CEO," said Mr. Lewis. "He has led RBC GAM from its foundation in 2008 – via the amalgamation of RBC Asset Management, Phillips, Hager & North Investment Management and Voyageur Asset Management – to the acquisition of BlueBay Asset Management in 2010." said Mr. Lewis.
RBC GAM currently has $350-billion in assets under management.