RBC expands U.S. business with cash-management offering
After about a decade of steady growth at its U.S. investment bank, Royal Bank of Canada is launching a cash-management business in its “second home market” in a bid to win more of its clients’ spending.
Canada’s biggest bank hasn’t previously offered treasury and liquidity-management services to the large companies it works with on deals, financing and other capital markets services in the U.S. chief executive Dave McKay has teased the bank’s plans to change that several times on recent investor calls, and the bank on Tuesday officially announced the new services, dubbed RBC Clear and aimed at Fortune 1000 companies.
The Toronto-based bank has spent the last two years gathering client input and building a platform for customers to manage the flow of payments and receivables, pay taxes in the most efficient jurisdictions, balance currency risks and more, said Kartik Kaushik, who joined the firm from Citigroup Inc. in 2022 and is now head of RBC Clear.
“The strategy is centred around creating relationships and deepening relationships with the clients,” he said in an interview, adding that Royal Bank had heard from customers that there was a gap in its offerings. “Given our intent to further invest and scale up our U.S. business, this is a logical expansion of the business model.”
Kaushik estimates that about a third of institutional spending on capital-markets services goes toward cash management — potential revenue that Royal Bank was leaving on the table. The company also will gain a new source of organic liquidity and pick up better information on its clients’ capital-markets needs.
U.S. cash management revenue took a hit during the pandemic but has since rebounded, according to surveys published by Ernst & Young LLP,
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