Biggest of the Big Six: How RBC opened a $100-billion market-cap gap over its banking rivals

financialpost.com:

J.M. Smucker Co. chief executive Mark Smucker leaned on close advisers when he made the decision to bolster the jelly and coffee company through a US$5.6-billion acquisition in 2023 of Hostess Brands Inc., an equally well-known name in food, and they came from a seemingly unusual place: a Canadian bank.

The transaction involving the Ohio- and Kansas-based food companies looked like just one of the many mid-sized deals that happen every year in the United States. But for Royal Bank of Canada, it was the culmination of a strategic shift in the aftermath of the great financial crisis, when it determined that the smart move was to focus on snapping up dealmaking superstars suddenly cut loose from their American and European firms so that it could compete with the biggest global players in investment banking.

The strategy paid off, with RBC’s team in position to pitch the acquisition of Hostess to New York Stock Exchange-listed Smuckers, positioning its team of bankers as the lead financial adviser on the deal that combined household-name brands such as Twinkies, DingDongs, Folgers coffee and Jif peanut butter. The team was also able to arrange a committed bridge facility to fund the acquisition and advised on the subsequent permanent capital structure.

The strategic pivot to investment banking in the U.S., which coincided with pulling out of an unsuccessful and capital-intensive foray into the ultra-competitive and regulation-heavy retail banking market there, put RBC in a prime position when another global financial services player, HSBC Holdings PLC, was preparing to part with its Canadian franchise for $13.5 billion.

RBC was the buyer, beefing up its position in personal and commercial banking, the largest and most