* Would consider small acquisitions to accelerate growth
* CEO says primary strategy is to grow organically
* Sees City National profit more than doubling by 2020
(Adds comments from RBC CFO on conference call)
By Matt Scuffham
TORONTO, June 17 (Reuters) - Royal Bank of Canada RY.TO
plans further expansion in the United States following its $5
billion acquisition of Los Angeles-based City National in
November, Chief Executive Dave McKay said on Friday.
McKay said acquiring City National gave the bank an
"enormous opportunity" to grow in the U.S. and it could look at
further acquisitions to supplement organic growth.
"We would consider strategic options to make small
acquisitions that could help accelerate growth in the United
States and provide a good payback to shareholders in a
reasonable period of time," he said.
RBC sees the United States as a key growth market, offering
opportunities to expand its wealth management and capital
markets businesses at a faster rate than in Canada, where it
already has a dominant position.
"We have invested in the California economy, which is the
size of the Canadian economy, so there's enormous opportunity to
grow here and clearly organic opportunity to expand into other
cities using RBC's wealth management and capital markets
strength to take City National there," he said.
The purchase of City National, known as Los Angeles' "bank
to the stars" because of its ties to the movie industry and
celebrities, gave RBC an opportunity to access high net-worth
clients in the United States.
RBC Chief Financial Officer Janice Fukakusa told investors
on a conference call on Friday that the bank expects City
National to more than double its pre-tax profit to over $1
billion by 2020, and said total integration costs from the
merger are expected to be between $130 million and $150 million,
25 percent to 30 percent less than originally anticipated.
The deal enables RBC to provide investment banking services
to City National's commercial, private banking and
entrepreneurial customers and City National to offer wealth
management services to RBC clients.
"We see many opportunities to drive revenue growth including
cross-selling City National's products to RBC's clients and vice
versa," Fukakusa said.
City National's Chief Executive Russell Goldsmith said in an
interview that the bank had avoided having to shed key
customer-facing staff through the merger, allowing it to focus
instead on continuing to drive revenue growth.
"Everything we've seen has been very encouraging as to the
ability of RBC in the United States working with City National
to grow. We're seeing a lot of opportunities. Their capital
markets business is very strong in media, entertainment,
healthcare, technology; all areas where we're working," he said.