Royal Bank of Canada has hired Kelly Coffey, the head of JPMorgan Chase & Co.’s private bank, to run City National Corp., a move that bolsters its American footprint and sets high expectations for the California-based business.
Since RBC acquired City National for $7.1-billion in 2015, the American bank has been run by its long-standing chief executive, Russell Goldsmith, who also became the chair of RBC’s U.S. wealth-management arm after the acquisition closed.
Mr. Goldsmith is the grandson of a City National co-founder. His father, Bram, ran the bank before him. Ms. Coffey’s hire marks a significant evolution in the bank’s leadership – and in her own career. Until now, she had spent her entire career, spanning three decades, at JPMorgan and its predecessor company, Morgan Guaranty.
By recruiting a top executive from a prominent U.S. bank, RBC is setting the stage for a new phase of growth south of the border. City National caters to high-net-worth clients, and this segment of the market is expected to drive wealth-management profits for the foreseeable future, largely because it has exhibited the best asset growth. Ms. Coffey has ample experience in this market, with JPMorgan’s private bank widely viewed as one of the market leaders.
The hire also makes Ms. Coffey a key figure in RBC’s future. Before the City National acquisition, investors and analysts had started to ask what would drive growth, because the Canadian market was heavily saturated and RBC had ruled out doing another expensive bricks-and-mortar retail banking acquisition in the United States. Its previous purchase of North Carolina-based Centura Bank in 2001 proved to be a bad decision, and Centura was sold in 2011.
The answer came early in 2015: City National.
The acquisition was shepherded by RBC chief executive Dave McKay, who took over in August, 2014, only five months before the deal was announced. Despite that tight timing, Mr. McKay had been trying to put together a U.S. growth strategy for three years by that point. In 2012, as head of RBC personal and commercial banking, he grew interested in Los Angeles-based City National, so he decided to snoop around. To test the bank’s customer service, he assumed a fake persona and visited its New York office on Park Avenue, pretending to be an executive moving to Manhattan.
“I was blown away by the experience,” he told The Globe and Mail at the time of the City National acquisition. “It made me feel very special.”
A few months after this secret shopping expedition, Mr. McKay met with Mr. Goldsmith for dinner at the Peninsula Hotel in Beverly Hills. At the time, City National was not for sale and Mr. McKay accepted that. But he made Mr. Goldsmith promise one thing: “I want to be your first call if you change your mind. That’s all I want to hear," he told The Globe last year.
Eventually Mr. Goldsmith did call and the deal came together. Three years on, Mr. Goldsmith, now 68, is stepping back, handing the reins to Ms. Coffey. (He will remain chair of City National and chair of RBC’s U.S. wealth business.)
Ms. Coffey assumes the new position after a career at JPMorgan, where she held multiple roles, including running the diversified-industries arm of its investment bank, advising companies such as Ford Motor Co. and United Airlines Inc. Most recently, she ran the private bank, which caters to high-net-worth clients and has US$800-billion in client assets.
Ms. Coffey is a graduate of Georgetown University’s foreign service master’s program, and she has said she never intended to go into banking – but ultimately became captivated by it. Early in her career she worked on mergers and acquisitions in Argentina, and JPMorgan partly acquired the telephone company in the northern part of that country.
“Even though I was learning finance, it was like watching international affairs unfold in front of my eyes," Ms. Coffey said in a 2016 interview with Fox Business News.
Tim Kiladze