Strategy
UPDATE: RBC Sparks Review Of Asian Wealth Management Business
In recent years, numerous Western firms have withdrawn from Asia's private banking sphere, hurt by pressure to reduce costs closer to home, slow growth and swelling compliance costs.
Despite Royal Bank of Canada last week ensuring it “remains committed to the [Asia-Pacific] region”, Canada's largest lender has, in fact, undertaken a review of its Asian wealth operations, this publication has learnt.
RBC's chief executive David McKay last week declined to say whether the Toronto-headquartered bank was seeking a buyer for the business, although previous efforts to scale back international wealth management operations have often come after reviews were initiated.
“We always do strategic reviews, particularly given that we've got a new team there and we're looking at implementing some new ideas,” McKay reportedly said, according to media reports. “We've got a strong client base in two key markets – Hong Kong and Singapore – and it's just part of the normal planning process.”
A spokesperson for the firm confirmed the accuracy of the reports but offered no further comment on the matter.
In recent years, numerous Western firms have withdrawn from Asia's private banking sphere, hurt by pressure to reduce costs closer to home, slow growth and swelling compliance costs.
Most recently, the Netherlands' biggest bank, ABN Amro, agreed in December last year to sell off its private banking operations in Asia and the Middle East, which has $20 billion in assets, to Liechtenstein-headquartered LGT.
The review of RBC's Asian wealth business was sparked because the bank's global head of wealth management feels the Asian unit, which has less than $10 billion in assets, lacks the scale to generate adequate profit, Reuters last week reported, citing anonymous sources.
Royal Bank of Canada has retreated from wealth management in some international markets in the past four years to focus on bolstering its US business while maintaining its Canadian market share.
In 2015, the firm sold its Swiss private banking unit after shutting its wealth management shop in the Caribbean. It also closed some of its international advisory and private banking divisions in the US and Latin America.
