ADMS 1010 Lecture Notes - Consumer Protection, Wealth Management, John Cleghorn
•It was one of the most profitable banks in the world.
•Offering personal commercial banking, wealth- management services, insurance, corporate,
investment banking and transaction processing services. Later realigning its 5 business
segments into 3. Revenue ↑
•The first segment is Canadian Personal and Business, which include banking and investment
business and global insurance business. E.g. deposits, investment, debit and credit cards,
mortgage, loans, insurance service.
•The second segment is the U.S and international Personal and Business Group. E.g. RBC’s
banking and retail brokerage business in U.S, and private banking internationally. And also
wealth- management activities of RBC Dain Rauscher.
•The third segment is Global Capital Markets which provides financial products and services to
clients, corporations, and governments. E.g. debt, equity, foreign exchange.
•Mandates a 10% capital on ownership for any single entity.
•It had an impact on the financial- services industry, and affect the strategy of the banking
•Politicians actually didn’t help with the overall financial performance in the market. Their best
interest was just to balance national and their political career. This made the issue become a
Failed Merger Attempts
•John Cleghorn (CEO of RBC) negotiated a merger with Matthew Barrett (CEO of BMO) to compete
with the global rivalry.
•Government and the public against mergers. It is because they think that the banks were already
too big, too power.
If the Mergers fail, it creates a problem of too big to fail.
•MacKay Report: There should be no ban on mergers. It called for strategies to enhance consumer
protection, suggestions for creating more competition and allowing more activity from foreign-
•Ianno Report: comments that mergers would result in larger-scale job losses, reduce consumer
choice, and concentrate too much political and economic power.
•This results the failure of the RBC-BMO merger attempt. Reasons: giant institutions would be
created, raise anti- trust issues to lead to higher prices and lower level of service, decision-
making power on credit allocation in too few hands.
Alternatives for RBC:
•Enter to the U.S market and operate in domestic insurance business.
•Greater competition for insurance leads to better pricing and more choices for consumers.