Canada 's Leading Financial Institution

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Canada’s Leading Financial Institution

The Royal Bank of Canada (RBC) was founded in Halifax, Nova Scotia in 1864, and started its expansion into the Maritime Provinces in the 1970s. Today, RBC is Canada’s largest financial institution by market capitalization and total assets . RBC competes globally among the largest banks in the world with over fifteen million clients in forty-six countries worldwide. Although the majority of RBC’s revenues are produced in Canada (64%), a bit over a third are in the U.S (18%), and internationally (18%) , (See Exhibit 1).
In 2013, The Global Finance Magazine titled RBC the “Second Safest Bank in North America,” and “Fifteenth Safest Bank Worldwide,” after Toronto Dominion Bank Group (TD), . These
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RBC’s efficient use of capital this past quarter is one of many reasons this financial intermediary was able to report a record third quarter with net income surpassing $2.3 billion; a 4% increase from Q3, 2013 .
Despite this financial intermediary’s immense global success, RBC’s diversified business operations face a significant amount of risk. These risks involve liquidity & funding, market risk, operational risk, foreign exchange risk, insurance, regulatory compliance, strategic risk, competitive risk, as well as credit risk. RBC manages these risks through ensuring that the business activities provide an appropriate risk-return trade-off, while staying within their Risk Appetite. RBC’s specific Risk Appetite is based on four major components and encouraging the types of risk and amount of risk that RBC is willing to take on in order to meet their strategic goals , (See Exhibit 3).
RBC engages a strong risk culture, with an understanding of risk awareness and responsibility. They use several methods to manage and alleviate their vulnerability to different types of risk. This bank’s risk-management process includes in-depth risk measurement, risk control, and risk governance, with setting the right risk culture at the top with their Board of Directors through their “Three Lines of Defence Model ,” (See Exhibit 4).
The 2014 quarterly reports reveal an expansion into the U.S. and international
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