Royal Bank of Canada

• Date founded: 1864

• Industry: Financial services
• Corporate headquarters: Toronto, Ontario
• Type: Public

The Royal Bank of Canada is one of Canada’s “Big Five” retail banks. In the 2020s, the bank employed around 95,000 full- and part-time employees to serve a worldwide customer base of approximately 17 million clients in the US, Canada, and twenty-seven other countries, including nearly nine million mobile customers. Operating globally under the brand name RBC, the Royal Bank of Canada is a diversified financial services company with interests in personal, small business, commercial, corporate, investment, and institutional banking. It offers basic banking services, including checking and savings accounts, credit cards, loans, mortgages, foreign exchange, and personal investing solutions. The Royal Bank of Canada also provides wealth management, global asset management, investor and treasury services, and capital markets operations for public and private corporations, central banks, regional and national governments, and institutional investors.

David I. McKay, the president and chief executive officer (CEO) of the Royal Bank of Canada, joined the bank as a computer programmer in 1988 before transferring to the firm’s retail banking sector. He ascended to the firm’s top position in 2014 and was named “Retail Banker of the Year” by Retail Banker International in 2012 and 2015. He remained President and CEO of RBC into the 2020s.

History

The Royal Bank of Canada was founded in 1864 in Halifax, Nova Scotia. During its early history, the institution was known as the Merchants Bank of Halifax, and it was incorporated under that name in 1869. It operated regionally for most of the nineteenth century, establishing a strong presence throughout the Maritimes while forming working relationships with banks in New York and London. The Merchants Bank of Halifax became a publicly traded company in 1893, listing on the Montreal Exchange.

Owing to the importance of Halifax as a port of entry for West Indies imports like rum and sugar, the Merchants Bank of Halifax largely focused its early expansion efforts in Cuba and the Caribbean. The growing firm changed its name to the Royal Bank of Canada in 1901 and relocated its headquarters from Halifax to Montreal in 1907. Like its “Big Five” peers, the Royal Bank of Canada achieved larger and larger percentages of nationwide market share through an aggressive acquisition strategy. During the 1910s, the firm entered the Ontario, Quebec, and Western Canadian markets by merging with numerous smaller regional financial institutions. In 1925, the Royal Bank of Canada completed the most important acquisition of its early history when it took over the Winnipeg-based Union Bank of Canada in what was the largest deal of its kind in Canadian history at that point. The move brought RBC 327 new branches and $115 million in new assets, making it the largest bank in Canada. Apart from a brief three-year swoon during the Great Depression (1929–1939), the Royal Bank of Canada has remained the nation’s largest private financial institution, as measured by assets under management, ever since.

During the postwar era, the Royal Bank of Canada established itself as a major financier in the nation’s growing oil and gas industry, following a general trend that saw Canada’s largest banks move to establish themselves in particular financial market specializations. By the late 1960s, the Royal Bank of Canada had also become the nation’s top residential mortgage lender, holding more than half of all individually held mortgage loans in the country.

During the 1980s, the Royal Bank of Canada emerged as one of the world’s top international lenders, which helped the bank establish itself as a major global investment bank. In 1998, RBC announced plans to merge with the Bank of Montreal to create a Canadian banking giant, but the federal government disallowed the move on the grounds that it would be anti-competitive and disadvantageous for Canadian consumers. In response, RBC accelerated its foreign acquisitions strategy and has since continued to diversify in the United States and internationally while emphasizing wealth management and brokerage operations.

Impact

As the largest financial institution in Canada since the mid 1800s, the Royal Bank of Canada has had an immeasurable impact on the nation’s continued growth and economic development. Its operations in the oil and gas, energy, resource development, and residential mortgage sectors were major catalysts for the Canadian economy during the twentieth century.

The Royal Bank of Canada has also made its presence felt culturally and politically. Its Montreal headquarters at Place Ville Marie was the tallest skyscraper in Canada when it opened in 1962. The bank also controversially decided to relocate its base of operations from Montreal to Toronto in 1976 amid the rising influence of the separatist Parti Québécois and mounting political tensions that posed the very real threat of Quebec’s departure from Canada. At the time, the bank’s decision was highly contentious and triggered a great deal of political debate, demonstrating the ability of a major financial institution to influence national politics.

In the early twenty-first century, the Royal Bank of Canada established a major presence in the United States through its acquisition of American financial institutions, including the Dain Rauscher Wessels investment house (2000), Centura Banks (2001), and the Tucker Anthony Sutro brokerage (2002). RBC later divested itself of Centura Banks in the aftermath of the subprime mortgage market collapse that triggered the global financial recession of 2008 and 2009 and opportunistically acquired the wealth management firms of Phillips, Hager & North (2008), and BlueBay Asset Management (2010). These moves made RBC the largest wealth management company in Canada and propelled it into the top fifty globally, extending its influence beyond Canada into the international financial markets, where it continued to be a leading presence into the 2020s. In 2022, RBC acquired the wealth management firm Brewin Dolphin, and in 2023, following the approval of the Minister of Finance, RBC acquired HSBC Bank Canada. In early 2025, RBC and the security and privacy artificial intelligence company Cohere partnered to create the next generation of artificial intelligence financial services.

Bibliography

Bonham, Mark S. “Royal Bank of Canada (RBC).” The Canadian Encyclopedia, 24 Apr. 2024, www.thecanadianencyclopedia.ca/en/article/royal-bank-of-canada. Accessed 9 Jan. 2025.

“Our Company.” The Royal Bank of Canada, www.rbc.com/our-company/index.html. Accessed 9 Jan. 2025.

Dobson, Sydney George. The Royal Bank of Canada, 1864–1945. The Royal Bank of Canada, 1945.

“Royal Bank of Canada (RY).” Reuters, www.reuters.com/markets/companies/RY. Accessed 9 Jan. 2025.

Shortt, Adam. The Early History of Canadian Banking, Origin of the Canadian Banking System. FB&C Limited, 2018.