London hub opens up new markets for RBC

As head of the London-based international operation of RBC Wealth Management, Mike Moodie is increasingly responsible for those wealthy clients who have interests in more than one country.

Like many in the upper echelons of RBC, the Canadian bank he has served loyally for 26 years, he is a Canadian national. And like most of those who have moved steadily through the hierarchy, he has also worked for a long stretch in the Caribbean, particularly Barbados, a key access point to the lucrative Latin American market for Canadian businesses.

Mr Moodie’s appointment to the London office, where he has a perfect view of Tower Bridge from the dining rooms in which he entertains visitors, was part of the bank’s strategy, laid down nearly two years ago by George Lewis, global CEO of RBC Wealth Management.

This involves sourcing new assets from clients based in developing markets, many of them with a strong connection to London. Existing expertise from North America – including lending, international trusts and estate planning in addition to portfolio management – will be used to build up a reputation in both the UK and in emerging economies.

Although RBC celebrated its 100th anniversary of doing business from London in 2010, it is only under Mr Moodie that the bank is beginning to take this location seriously for wealth management, with a string of senior hires. These include Shehreen Quayyum and Jaime Zuloaga, from HSBC and Barclays respectively, who will help manage assets out of London for Latin American and US clients looking for what Mr Moodie calls a “secure institution”.

This use of London as a central hub for global wealth management is relatively new, admits Mr Moodie. Previously the UK was better known for the bank as a centre of capital markets expertise, and RBC still employs 1,100 people there on the trading side.

“Our wealth management business was classically set up along the lines of other private banks,” he recalls. “This involved providing solutions for clients from another location, principally the Channel Islands, for trust business in particular.”

But the gradual evolution of this business has empowered London to take on a far more central role in the bank’s strategy. “Our history is of dealing with clients where something in their lives and business affairs involved crossing a border,” says Mr Moodie. “This played out very well with resident, non-domicile clients, who eventually turned to London for much of their wealth management requirements.”

The new framework has however embraced not just this growing pocket of international clients but also ultra-wealthy UK nationals, providing an added opportunity set for RBC.

“Our ambitions in the UK are not centred round a ‘bricks and mortar’ private banking strategy,” he says. “They are rather about leveraging the abilities of our team of integrated wealth management specialists in London to serve the needs of this market.”

This involves concentrating on wealth preservation and transfer, rather than accumulation, which is left to the clients’ own entrepreneurial activities. The acquisition of trust businesses – including Ernst & Young in 2002, Abacus in 2005 and Delaware Trust in 2006 – shows the bank is oriented towards long-term relationships with clients, rather than providing transaction-driven services, says Mr Moodie.

“We are putting ourselves in a position where we can sit with the client and talk about their preservation and transfer needs for the long-haul. If you take the time to tackle client needs and get the requisite licences, you put yourself in a competitive position, while many of our rivals have chosen to exit this business.”

Ten per cent of world wealth is centred in London, he says. “We are expected to become a major player in this marketplace and have the advantage of being the only wealth management arm of a Canadian bank with a presence here.”

Leading competitors in this ‘ultra’ space include the likes of JP Morgan and Goldman Sachs, although he hopes to differentiate RBC’s approach from the ‘bulge-bracket’ players. “Our philosophy for the wealth management space is to provide an experience centred round us being the client’s trusted adviser for the long-term. People describe it as a boutique approach, backed by a significant balance sheet.”

RBC, which oversees more than $220bn (€170bn) for wealthy clients, plans to establish the UK as its third ‘home market’ after Canada and the US. This will also involve leveraging the portfolio management expertise of long-only and alternatives house BlueBay Asset Management, acquired by RBC in 2010, while also significantly boosting numbers of relationship managers. Mr Moodie has overseen numbers rising from the “low 20s” two years ago to 55 today and aims to double this by 2015.

The other two relatively new, but fast-growing markets he hopes to plug into, both highlighted in recent McKinsey research, are Eastern Europe and the Middle East.

Indeed, he works closely with the bank’s emerging market group, which uses Geneva as a booking centre. To help fuel this expansion, the bank recently acquired wealth management businesses from Coutts, adding assets in Africa, Latin America and the Caribbean.

At the turn of the millennium, Geneva was the centre of excellence at RBC Wealth Management for Latin American clients, although the pattern continues to evolve. “There are opportunities for both Geneva and London to grow, with an emphasis on clients from emerging countries,” he adds.

It is hoped an influx of clients from both Eastern Europe and the Middle East, where political pressures are the most important consideration, will help boost managed assets. While sales teams are being established for these regions, they will be expected to book assets into the growing London hub.

“Russia and Ukraine will be our two largest countries for expansion,” says Mr Moodie. “The typical scenario would involve purchase of a prime London property, which is an attractive asset to hold. This is less of an investment and more about capital preservation, consistent with family connections and schooling needs of children. A lot of our competitors are struggling with these requirements.”

Enquiries from wealthy Ukrainians have increased under the current government, he says. “Wealth classically moves from an area where it is uncertain and scared to an area where it is safe and secure and will find its way to where peace of mind is achieved.”

Potential clients in these countries are particularly attracted to Canadian banks, as these represent “the world’s most sound and safe banking system,” adds Mr Moodie.

He admits that he has an uphill struggle to market his bank’s name, which does not boast the same brand awareness as better-known global franchises. “Potential clients we talk to don’t really know about RBC. But they say that’s a good thing, as these days you hear more about banks that do something wrong,” says Mr Moodie, citing a rebellion against the service provided by some more established names.

“Over the last couple of years, we have been introduced to many clients who have had their loans called or significantly re-priced,” he says. “We have found ourselves in a really opportune moment. It may not last forever, but today our offer seems to match client sentiment about generational transfer, managing investments and fiduciary responsibility, as opposed to transactional relationships.”

Complete offering

Ultra high net worth clients normally diversify their portfolios across three or four institutions, each one used for a particular investment specialism, believes Mr Moodie. “Typically, clients expect a Canadian wealth management firm to be very strong in precious metals, mining and energy and they would expect RBC to hold strong credentials in this area of investments.”

His firm accesses opportunities right across the market, as well as from proprietary house BlueBay, having made the move to open architecture, internationally, in 2003. “We moved from sitting across the table and talking about our proprietary offerings to sitting next to the client and talking with them about the whole offer in the market. And we never looked back.”

CV

Michael Moodie

Education: Bachelor of Commerce degree from the University of Ottawa

1985: Joined RBC

1997: National sales manager in Toronto

1999: Moved to Barbados as managing director

2002: Moved to Nassau, Bahamas to assume the role of vice president and director of the international wealth management Caribbean offices and managing director of the Bahamas office

2003: Moved to Miami, Florida to assume the role of vice president and director for the US business

2005: Appointed vice president and head of the US and Caribbean region

2008: Appointed vice president and head of the Americas region

2010: Appointed head, wealth management UK

Mike Moodie, RBC