RBC comes out on top in fixed-income industry: report

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Royal Bank of Canada's capital-markets arm is making gains in Canadian fixed income, according to a new report that credits the bank's efforts to upgrade its technology and train young employees.

The study from Greenwich Associates found that RBC Dominion Securities Inc. is outpacing its domestic rivals in terms of market share and quality of service. It comes ahead of RBC's third-quarter results on Wednesday, kicking off an earnings season in which capital-markets performance is expected to be a focus for the industry.

"The sales and trading businesses feel healthier over the last six to eight months than they have over the last couple years," Jim Byrd, RBC's head of fixed income and currencies in Canada, said in an interview on Tuesday.

There are a number of factors contributing to RBC's success in the Canadian fixed-income segment, said Peter Kane, a consultant with Greenwich Associates and the report's author. Among them were investments the bank made in technology systems across its fixed income, currencies and commodities business.

The bank's ability to recruit young talent and train them to deliver high-quality service also played a crucial role, according to the report, particularly in light of the so-called juniorization phenomenon that has become prevalent in recent years. The global investment-banking industry has seen older employees increasingly replaced by younger ones in an effort to cut costs amid a challenging operating environment.

"Across capital markets, buy-side organizations are complaining about the loss of experienced sell-side professionals due to the 'juniorization' of sales-trading and other roles," Mr. Kane said.

"But RBC has succeeded in integrating younger employees into the coverage mix effectively while maintaining top-quality service. Much of this, we believe, has to do with investments in internal training and supporting programs," he added.

RBC Dominion Securities Inc. snagged the top spot in terms of market share in Canadian fixed income, followed by TD Securities Inc.

BMO Nesbitt Burns Inc. and CIBC World Markets Inc. tied for third place, followed by Scotia Capital Inc.

The report was based on 87 interviews conducted between February and May of 2017 with institutional investors in the Canadian fixed-income space.

RBC also scored top marks in terms of quality of service, according to the report, which rated the dealer among the top in all of its four categories. RBC's Canadian fixed-income business came out on top in the trading-quality category and was also rated among the best in terms of sales quality, along with BMO and TD.

In the research-quality category it is joined by BMO. The leaders in terms of overall quality for Canadian fixed-income dealers are RBC, BMO and TD.

Mr. Byrd noted that although the United States has become an important growth platform for the bank, maintaining its competitive position in Canada remains a priority.

"It's important to us to remain top of the stack in Canada," he said. "We want to ensure that we don't take the Canadian fixed-income market for granted."