Bank splits P&C unit and strengthens leadership team
Royal Bank of Canada (RBC) is undergoing a significant leadership and reorganization shakeup, with key changes potentially signalling the start of a CEO succession race.
The banking giant’s shakeup includes the division of its largest unit into two separate entities. This move, one of the biggest changes during CEO Dave McKay's ten-year tenure, comes in the wake of RBC's recent acquisition of HSBC Holdings' Canadian division.
Effective September 1, Neil McLaughlin, the current head of personal and commercial banking, will transition to lead the wealth management division. Doug Guzman, the current wealth management chief, will assume the role of deputy chair while remaining on the executive leadership team.
The personal and commercial (P&C) banking unit will be split, with Erica Nielsen heading personal banking and Sean Amato-Gauci leading commercial banking.
RBC’s high-profile HSBC Canada acquisition added over 4,000 employees and more than 100 branches to its operations.
The leadership shake-up comes as analysts speculate about McKay's eventual successor at the head of RBC.
McKay, who has been with the company since 1993 and became CEO in 2014, indicated his intention to remain at the helm for a while and lead the bank through this transition.
“I’m personally energized by the opportunity to work with these extraordinary leaders in the coming years as they take on new roles and responsibilities on our Group Executive leadership team,” McKay said.
Jefferies Financial analyst John Aiken interpreted these moves as a sign that, while a leadership change might be on the horizon, it is not likely to take place soon.
“The moves, to me, imply that the clock is ticking but that a change is not imminent,” Aiken told Bloomberg. “Presumably Dave — and the board — would like to have him at a minimum oversee the integration of HSBC Canada.”
The reorganization highlighted McLaughlin's position in the CEO succession race. His new role includes overseeing City National, the Los Angeles-based bank acquired by RBC in 2015. The bank has faced recent challenges, including regulatory issues and profitability concerns.
"Neil ran the Canadian operations, he's now heading up the wealth management operations, which is essentially their US platform, and it definitely bolsters his resume," Aiken noted. However, he cautioned against narrowing the CEO race to a single candidate, mentioning Derek Nelder, head of RBC's capital markets division, as another potential contender.
The bank also promoted Jennifer Publicover, currently leading the insurance business, to a group head role on the executive team. This move, along with Nielsen's appointment, increases female representation in RBC's leadership.
Read more: Economist departs RBC after HSBC deal
RBC spokesperson Edith Galinaitis commented on the changes: "We are taking the opportunity to review our structure and talent to simplify the way we work, better position us to take advantage of our scale, speed up decision making and elevate our leaders to deliver on strategic growth priorities with clients at the centre." She added that the bank has a "strong succession pipeline."
Following this reorganization, RBC, with a market capitalization of $213 billion, will report under five business segments: personal banking, commercial banking, wealth management, insurance, and capital markets.
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