Royal Bank of Canada is shuffling its leadership ranks and breaking its largest division into two in one of the biggest reorganizations of Dave McKay’s decade-long tenure as CEO.
Canada’s biggest bank is moving Neil McLaughlin, the longtime head of its personal and commercial banking division, into a new role as chief of wealth management. Doug Guzman, who leads that business now, will become deputy chair and remain on the executive leadership team.
The P&C unit will be split, and Erica Nielsen will take over as head of personal banking and Sean Amato-Gauci will lead the commercial side. All of the changes will be effective Sept. 1, the lender said in a statement Thursday.
RBC expanded its domestic business this year by completing its acquisition of HSBC Holdings’ Canadian division, which added more than 4,000 employees and more than 100 branches.
McKay, who has been at RBC since 1993, became CEO in 2014 and indicated in Thursday’s announcement that he plans to remain at the helm for a while as McLaughlin and the new executives settle into their new roles.
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“I’m personally energized by the opportunity to work with these extraordinary leaders in the coming years as they take on new roles and responsibilities on our Group Executive leadership team,” McKay said in the statement.
Stefan Wermuth/Bloomberg
“The moves, to me, imply that the clock is ticking but that a change is not imminent,” the Jefferies Financial analyst John Aiken said in an interview. “Presumably Dave — and the board — would like to have him at a minimum oversee the integration of HSBC Canada.”
CEO contenders
Still, the changes highlight McLaughlin’s standing in the CEO succession race. His new role includes some responsibility for City National, the Los Angeles-based bank that RBC acquired in 2015 in one of McKay’s most significant decisions.
City National has struggled with regulatory troubles and a lack of profitability amid a surge in financing costs as interest rates jumped. Last year it was bailed out by its parent bank, which injected billions in fresh capital to bolster its balance sheet.
“Neil ran the Canadian operations, he’s now heading up the wealth management operations, which is essentially their U.S. platform, and it definitely bolsters his resume,” Aiken said.
However, it’s too soon to narrow the CEO race down to one person, he added, noting that Derek Nelder, who leads RBC’s capital markets division, is also likely in the mix. And the fact that the bank kept Guzman on board in the deputy chair role “shows how much they respect his experience, his wisdom, and they obviously did not want to lose him,” Aiken said.
RBC also promoted Jennifer Publicover, the current leader of its insurance business, to a group head role, adding her to the executive team. Along with Nielsen, that move bolsters the number of women in the bank’s leadership group.
In April, RBC fired Chief Financial Officer Nadine Ahn, stating that she’d violated its code of conduct by having an undisclosed “close personal relationship” with a colleague who was given preferential treatment. Katherine Gibson was named interim CFO and no change was announced on that front on Thursday.
Edith Galinaitis, a spokesperson for the bank, said RBC has posted strong financial results and seen momentum after closing the HSBC deal.
“We are taking the opportunity to review our structure and talent to simplify the way we work, better position us to take advantage of our scale, speed up decision making and elevate our leaders to deliver on strategic growth priorities with clients at the center,” she said in an email, adding that the bank has a “strong succession pipeline.”
The bank, which has a market capitalization of $156 billion, will report under five business segments — personal banking, commercial banking, wealth management, insurance and capital markets.
