Royal Bank of Canada is pushing to expand in United States financial markets — where it recently landed a role in the SpaceX initial public offering and Alphabet Inc.'s massive equity capital raise — with plans to hire more senior bankers and new graduates.
Growth Mode in the US
The lender calls the U.S. its "second home market," and RBC Capital Markets, already dominant in Canada, earns half its revenue in the U.S. But there's room to expand, Derek Neldner, group head and chief executive of the division, said. The division has added 205 people in the country in the past seven months, including 23 managing directors.
"We're very much in growth mode. We're looking to hire, we're increasing our hiring," he said about RBC Capital Markets' ambitions across Canada, the U.S. and Europe. On U.S. investment banking in particular, "we're adding across the board," he added. "But I would say the key sectors are technology, healthcare, industrials and financial institutions."
Expanding Trading Businesses
RBC is also expanding its U.S. trading businesses, including equities, credit and macro operations such as foreign exchange, rates and commodities, said Neldner, who joined the bank in 1995 and took charge of the capital-markets business in 2019.
The division has seen net income roughly double since then, which he attributes in part to the "robust external environment" in markets as well as becoming more aggressive on its own investments. Those include recruiting, technology and the launch of a U.S. cash-management business in 2024. That offering of treasury and liquidity-management services to the big companies it works with on deals, financing and trading is helping deepen those relationships, he said.
Defensive Stock Appeal
The large relative scale of RBC's capital-markets unit plus its broad business mix across trading, corporate and investment banking has helped keep revenue volatility low, making it a good defensive stock to own if a market slowdown does materialize in the coming quarters, Bank of Nova Scotia analyst Mike Rizvanovic wrote in a report in March.
Technology Franchise Growth
About five years ago, the firm began bolstering its technology franchise, starting with the hire of industry veteran Kirk Kaludis, who joined to run technology investment banking from San Francisco. Subsequent hires helped strengthen relationships with larger-cap tech companies, Neldner said.
"It's a good example of where we've been building the team and building the capabilities," he said.
RBC was the only Canadian bank among the 23 bookrunners on the SpaceX IPO — listed on the second row of four in the prospectus — and it was a joint book-running manager on Alphabet's US$84.75 billion equity capital raise.
Canadian Dollar Bond Market
Meanwhile, as AI hyperscalers turn to the Canadian-dollar bond market in their global quest for capital, RBC has used its prominent domestic position to help large clients access capital in the country, Neldner said. It was among the co-leaders on the recent record-setting maple bond issues by both Alphabet and Amazon.com Inc.
