Royal Bank eyeing small U.S. acquisitions
Three-month TSX trading in the Royal Bank
The Royal Bank of Canada is looking for smaller U.S. commercial banks or wealth management companies that it might buy, chief executive Gordon Nixon said Friday.
"We are and have been active in terms of exploring strategies and alternatives in both those sectors," he said.
The U.S. financial sector is in turmoil with large and small institutions failing or being pressured by the lack of ready credit. Many lenders have stopped making loans because of fears that they might not be repaid, media reports say.
That has left those companies willing to consider a takeover, and the Royal — along with other Canadian banks — are seen as being in much stronger financial shape than many U.S. banks.
The bank has steadily been making acquisitions, including a U.S. purchase that substantially boosted the number of U.S. wealth managers it employs and the assets it administers.
In early September, the bank increased the size of a preferred share issue to $350 million from the planned $225 million citing strong demand, one indication that investors are comfortable giving the bank their money.
It reported a sharp drop in profits for the nine months ended July 31, but it still made $3.4 billion, down from $4.2 billion in 2007.
The most recent major U.S. financial institution to get in trouble was Washington Mutual Inc. On Thursday, the U.S. Federal Deposit Insurance Corp. took over the bank and sold its banking assets to JPMorgan Chase & Co. for $1.9 billion US.
With files from the Canadian Press
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