THE VOICE OF THE MARKETS RBC looks to profit amid European blues RBC Capital Markets is beefing up one position in and a strong remit during the summer, following financial sponsors, aiming to boost its and growing US business, which an internal reshuffle that saw continued to make impressive Derek Neldner’s promotion to chief European business during 2020, writes strides in 2019. Last year’s highlights executive of the ’s capital David Rothnie. included bagging a role as lead markets division, which includes all adviser on the SunTrust-BB&T of its corporate finance activities, n March, Royal merger — the biggest bank tie- following Doug McGregor’s (RBC) will mark the new decade up since the financial crisis. For retirement, who officially leaves at by moving into new European a balance sheet bank like RBC’s, the end of January. Iheadquarters at 100 Bishopsgate winning a lead role on an all-share Neldner was previously global in London. The timing is fitting: merger was particularly satisfying. head of , but it is almost a decade since the It pushed the firm into the top 10 by RBC did not keep that structure, lender emerged unscathed from the investment banking fees for 2019, instead appointing Critchley head of financial crisis and announced its according to Dealogic. investment banking for EMEA and ambition to become a full-service , and Jim Wolfe and Matthew investment bank in the region. EMEA: less hiring Stopnik retaining their positions as The upcoming relocation is a RBC Capital Market’s European US heads. Trevor Gardner is head of sign of achievement and ongoing operations are much smaller. In its Canada. commitment, and, taking a 10 annual report for 2019, covering the Having overseen a period of rapid year view, the expansion of its fiscal year that ended on November expansion in Europe, Critchley investment banking business has 30, RBC said it had a “select predicts less external hiring in EMEA been a success. Josh Critchley presence” in Europe. In 2019, its in 2020, as the bank continues to has overseen much of it, having business fell one place to 22nd in adapt to a tougher environment. arrived in 2012 as head of European Europe, the Middle East and Africa, In December, RBC Capital Markets investment banking after stints at underlining its lowly status. But this conducted a series of job cuts, but and Lynch. underexposure may be helpful right this amounted to less than 2% of total Once again he sees an opportunity now, given the sector’s struggles in headcount in its London operations. against a darkening backdrop. “The Europe. European fee pool in 2019 saw one of Surviving upheaval its biggest contractions since 2008, For a firm that has shown strong so that exposes those with cost Investors will still profitability and the sort of double- base issues. We remain focused on the “back an equity story digit returns European banks overall profitability of the enterprise envy, RBC endured its fair share of and, with one of the highest returns and stand willing to upheaval last year. It reported an on equity in the sector, RBC is well- back smart M&A 8% fall in corporate and investment positioned to compete with the banking revenues for the fiscal year increasingly dominant US firms,” ending October 31, 2019, citing a fall Critchley told GlobalCapital. During Critchley’s tenure, he helped” in M&A activity, “primarily in Europe On a global basis, RBC Capital transform the firm’s European and Canada”. Markets measures up well against investment banking operations, The UK is RBC Capital Markets’ its US peers, having a double-digit which come under RBC Capital biggest European market and return on equity (RoE). According Markets, from a unit focused on the uncertainty over Brexit has to RBC’s own analysis, in 2019, RBC group’s core strengths in metals, hit volumes across the board. Capital Markets posted a RoE of mining and infrastructure, to “Headwinds were particularly strong 11.4%, while in the year to June 2019 a broad-based offering that covers all in some of our traditional areas RBC was the sixth most profitable industries and products, including of strength, such as infrastructure, bank in terms of post-tax earnings, M&A, equity capital markets and financials, and oil and gas, and across behind Citi, Bank of America, JP leveraged finance. He was able to M&A and leveraged finance more Morgan, Goldman Sachs and Morgan attract talent from bigger rivals in the generally,” added Critchley. Stanley. wake of the financial crisis. The bank was also coming off a RBC’s success is built on its number Critchley took on an expanded strong 2018, particularly >>

COPYING PROHIBITED WITHOUT THE PERMISSION OF THE PUBLISHER www.globalcapital.com RBC to focus on financial sponsors << in M&A, where it effort this year to reflect appeared to have made the growing opportunity in the transformation into a private capital. In 2018, the mainstream UK adviser. bank hired Graham Tufts It had a lead role advising from HSBC as part of a plan Melrose on its acquisition to expand its leveraged of GKN. This deal was a finance business and this testament to senior UK prompted a string of other bankers’ quality, including hires. Mark Preston, who held the “In 2020, the bank relationship with Melrose, is looking to deploy and Kevin Smith, who ran resources in specific areas European M&A until his by product and sector in retirement at the end of these markets [ie, these December. market conditions]. You Smith stepped down after have to double down on an eight year stint at the the things you’re good at,” firm, where he raised its said Critchley. Pragmatism profile and moulded a UK rightly betters ambition, team with clear expertise but there is room for RBC is moving into 100 Bishopsgate in London this year, a signal in public M&A. As a 30 year growth. of commitment to Europe M&A veteran with deep Last year, Tufts hired knowledge of UK public fellow former HSBC banker family offices. “Investors more overseas listings,” takeovers and an ability Florent Cassabois in will still back an equity said Uden. In ECM, Uden to originate deals, Smith to work on financing for story and stand willing to runs Europe, Michael will be hard to replace. French-based sponsors. back equity raisings for Goldberg runs the US, and It is a sign of how far the He will work alongside smart M&A.” Nitin Babbar runs Canada. franchise has come that Eric Meyer, who runs Uden’s team has its tail up As well as the move to RBC may look internally, investment banking in after excelling in a difficult new premises in London, as well as externally, for France. RBC runs its climate. “We’ve made RBC has been building its Smith’s successor. financial sponsor coverage good progress in corporate post-Brexit presence in One internal name in efforts on a regional basis; broking and have had one Europe. “We’ve doubled the frame is Andrew in Europe it is jointly of our best years in ECM, our space in Frankfurt Congleton, who joined from overseen by Tufts, in his rising to 10th in UK equity and Paris, have a strong in 2015. role as vice chairman, from 16th in 2018, and business in Madrid, and Another is Alex Thomas, a and Ed Dickinson, who is doubling our market share have a licence and an office managing director in the head of financial sponsors from 2% to 4%,” said Uden. in Benelux,” said Critchley. M&A department who has and leveraged finance In May, RBC acted as RBC’s European been with the firm for nine in the region. The bank sole bookrunner and sole development over the years. Thomas has a strong is bolstering the team sponsor to Greencoat UK last decade contrasts track record in industrials further by adding Craig Wind on the acquisition with European rivals’ and advised on the GKN Campbell, another former of wind farms from SSE restructuring and acquisition. HSBC banker who is to join and its subsequent £375m retrenching, while US RBC could also conduct at the end of February. equity capital raise — the banks increased their an external search. One The push is an attempt biggest by a European dominance in the region. banker said the route to capture the shift of renewable infrastructure In another decade, RBC the firm takes could capital from the public to fund. It also worked as will still occupy a selective provide insight into its the private realm, which is lead financial adviser and but significant place in thinking and ambitions a trend that all banks are corporate to Charter European investment for European M&A. When grappling with. RBC sees Court on banking. Critchley’s Smith joined in 2011 an opportunity to bring its its all-share combination medium-term ambition there was a real sense of sponsor and capital markets with OneSavings Bank. is for a top 10 ranking in momentum and a desire to capabilities closer together Critchley and Uden want Europe, and with RBC’s challenge the status quo. to harness this shift. to ensure that the bank’s balance sheet that should Now, after several years According to Darrell Canadian clients are be a yardstick to measure of contracting fee pools Uden, the bank’s London- well served in Europe — success. and with banks under based co-head of global especially given the wall of RBC’s culture is steeped continuing pressure to cut ECM, IPO market volumes money being deployed by in pragmatism and costs and boost returns, over the last decade peaked Canadian capital providers consistency, which are the emphasis is on getting in 2014. Since that peak, — and to help European becoming increasingly the best out of its existing volumes have fallen by companies tap into pools of highly priced qualities strengths. 30% in the US and by 60% liquidity in the US. across the industry. As in Europe. With the rise of “We have globalised our banks perhaps become Boosting sponsors private capital, it is more ECM offering and that more utility like in their and lev fin important than ever to gain increases cross-border returns, RBC could burn- RBC will aim to develop a access to the likes of private flows in a world where ish its appeal as a long- wider financial sponsors equity, venture capital and companies are seeking term bet. GC