While revelations of questionable transactions in Wells Fargo have made “cross-selling” a dirty word, RBC has no plans to drop the strategy for one of its US acquisitions, according to a report by the Los Angeles Times.
Last year, RBC bought LA’s City National Bank, otherwise known as the “bank of the stars.” RBC hoped to profit by cross-selling to clients from Hollywood and the broader entertainment industry.
RBC’s bet has paid off. City National Bank is expected to end this year with around US$44 billion, compared to its value of US$36 billion when the acquisition deal closed last November.
“[Cross-selling] is synonymous with meeting customer needs,” RBC CEO David McKay said to the Times. “If you do it properly, you’re meeting a customer need and adding value to that customer. Every business is built on that.”
The key word is “properly.” As the experience of Wells Fargo has demonstrated, cross-selling the wrong way could have serious consequences on client relationships and, possibly, a firm’s legal standing. Realizing this, RBC and City National have been very careful in their dealings.
“These are important client relationships. Nobody wants to get it wrong,” said City National CEO Russell Goldsmith. “These things sound simple, but that’s deceptive. You have to really dig into them. And we’ve done that.”
RBC and City National have just finished running a pilot cross-selling program in San Diego and Beverly Hills, which has helped in setting some rough guidelines for RBC’s advisors to follow. City National is now ready to introduce its services to RBC wealth management clients in other US markets, including New York and Southern California.
Analysts have found no reason for concern on the use of cross-selling between RBC and City National. “If this were a mass-market deal, I might feel different,” said Sohrab Movahedi, a banking analyst for BMO Capital Markets. “City National is not trafficking in small mortgages or small credit cards. It’s catering to high-net-worth, sophisticated clients.”
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