Corporate Governance at Royal Bank of Canada

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Case Details:

Case Code : CGOX009
Case Length : 18 Pages
Period : 2004
Pub Date : 2004
Teaching Note :Not Available
Organization : Royal Bank of Canada
Industry : Financial Services
Countries : Canada

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Excerpts

Business Segments

RBC operated in five major business segments: 1) RBC Banking, 2) RBC Insurance, 3) RBC Investments, 4) RBC Capital Markets and 5) RBC Global Services. RBC Banking was the bank's largest contributor to the net income (51% of net income in 2003)...

Background Note

The origin of RBC went back to the creation of Merchants Bank in 1864, in Halifax, Nova Scotia, a port city bustling with trade...

Corporate Governance Code

RBC had attempted to comply with the corporate governance guidelines of Toronto Stock Exchange (TSX)¹⁴.

The Board of Directors (Board) had also taken note of the US Sarbanes-Oxley Act¹⁵ (SOX), as well as the New York Stock Exchange's (NYSE) corporate governance listing guidelines...

Corporate Governance | Case Study in Management, Operations, Strategies, Corporate Governance, Case Studies

The Board of Directors

The Board consisted of an independent chairman, 16 independent directors and two executive directors and had in place four committees consisting only of independent directors. The Corporate Governance and Public Policy Committee (CGPC) had developed categorical standards of 'independence' with respect to the US's NYSE Corporate Governance listing Standards, in addition to the 'unrelated' standard as specified by the TSX Corporate Governance Guidelines...

Board Composition

RBC did not permit more than two Board members from management.The President and Chief Executive Officer (CEO) of the bank, Gordon M. Nixon and the Chairman Emeritus of RBC Centura Banks Inc., Cecil W. Swell Jr., represented the management. The bank complied with provisions of the Canadian Bank Act (Bank Act) and the TSX Guidelines with regard to directors being affiliated with or related to the bank. The CGPC, with advice from outside consultants, recommended the candidates suitable for nomination to the Board and continuously reviewed the composition and mandates of all the committees...

Excerpts Contd...>>

14] TSX had framed 14 guidelines that included all aspects of corporate governance to be adhered to by all companies listed under it.

15] An Act enacted in 2002, to protect investors by improving the accuracy and reliability of corporate disclosures made pursuant to the US securities laws (Enacted in 2002).