Enterprise Risk Management at Royal Bank of Canada
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Case Details:
Case Code : ERMT-017
Case Length : 13 Pages
Period : 2003
Pub Date : 2003
Teaching Note :Not Available
Organization : Royal Bank of Canada
Industry : Banking
Countries : Canada
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Background Note Contd...
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RBC opened offices in the UK in 1979 and in West Germany, Puerto Rico, and the
Bahamas in 1980. As Canada's banking rules relaxed, RBC bought Dominion
Securities in 1987. The US Federal Reserve approved RBC's brokerage arm for
participation in stock underwriting in 1991.
In 1992, RBC faced a $650 million loss after backing the Reichmann family's
Olympia & York property development company, which failed under the weight of
its UK projects. The next year RBC bought Royal Trustco, Canada's #2 trust
company, and Voyageur Travel Insurance, its largest retail travel insurer.
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A management shakeup in late 1994 ended with bank president John Cleghorn taking
control of the company.
In 1995 RBC was listed on the New York Stock Exchange. The next year, it joined
with Heller Financial (an affiliate of Japan's Fuji Bank) to finance trade
between Canada and Mexico. It began offering PC home banking in 1996 and
Internet banking in 1997. That year RBC became one of the world's largest
securities-custody service providers with its acquisition of The Bank of Nova
Scotia's institutional and pension custody operations.
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RBC and Bank of Montreal agreed to merge in 1998, but Canadian
regulators, fearing the concentration of banking power seen in the
US, rejected the merger. In response, the bank slashed its workforce
and implemented a sale-leaseback of its property portfolio (1999).
In the late 1990s, RBC grew its online presence by purchasing the
Internet banking operations of Security First Network Bank; the
online trading division of Bull & Bear Group (1999); and a 20% stake
in AOL Canada (1999). It bought several trust and fiduciary services
businesses from Ernst & Young. |
In 2000, RBC bought US mortgager Prism Financial and the Canadian retail credit
card business of BANK ONE. RBC also sold its commercial credit portfolio to U.S.
Bancorp and bought the insurance subsidiaries of South Carolina-based Liberty
Corporation to boost its US operations...
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