(Bloomberg) — Royal Bank of Canada is shuffling its leadership ranks and splitting its biggest division in two in one of the biggest shakeups of Dave McKay's decade-long tenure as chief executive.
Canada's largest bank is moving Neil McLaughlin, the longtime head of its personal and commercial banking division, to a new role as head of wealth management. Doug Guzman, who runs that business now, will become vice president and remain on the executive management team.
The P&C unit will be split, with Erica Nielsen taking over as head of personal banking and Sean Amato-Gauci leading the commercial side, with all changes effective Sept. 1, the lender said in a statement Thursday.
RBC expanded its domestic business this year by completing the acquisition of the Canadian division of HSBC Holdings Plc, which added more than 4,000 employees and over 100 branches.
McKay, who has been with RBC since 1993, became CEO in 2014 and indicated in Thursday's announcement that he plans to stay on for a while while McLaughlin and the new executives settle into their new roles.
“I am personally energized by the opportunity to work with these exceptional leaders in the coming years as they take on new roles and responsibilities on our Group Executive leadership team,” McKay said in the statement.
“The moves, to me, mean the clock is ticking, but that a change is not imminent,” Jefferies Financial analyst John Aiken said in an interview. “Apparently Dave – and the board – would like him to at least oversee the integration of HSBC Canada.”
CEO competitors
However, the changes highlight McLaughlin's position in the CEO succession race. His new role includes some responsibility for City National, the Los Angeles-based bank that RBC bought in 2015 in one of McKay's most significant strategic moves.
City National has struggled with regulatory problems and a lack of profitability amid rising financing costs as interest rates rose. Last year it was rescued by its parent bank, which injected billions in new capital to shore up its balance sheet.
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“Neil ran the Canadian operations, he's now running the wealth management operations, which is basically their US platform, and that definitely strengthens his resume,” Aiken said.
Still, it's too early to narrow the CEO race down to one person, he added, noting that Derek Nelder, who heads RBC's capital markets division, is also likely in the mix. And the fact that the bank kept Guzman on board in the role of vice chairman “shows how much they respect his experience, his wisdom, and obviously they didn't want to lose him,” Aiken said.
RBC also promoted Jennifer Publicover, the current head of its insurance business, to a group leadership role, adding her to the executive team. Together with Nielsen, this move increases the number of women in the bank's management team.
In April, RBC fired chief financial officer Nadine Ahn, saying she had breached 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 changes were announced on that front Thursday.
Edith Galinaitis, a spokeswoman 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, accelerate decision-making and elevate our leaders to deliver on our strategic growth priorities with customers 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 C$213 billion ($156 billion), will report in five business segments – personal banking, commercial banking, wealth management, insurance and capital markets.