Mike Moodie, head of RBC Wealth Management UK, discusses how being Canadian has helped the firm – and its peers – gain valuable brand traction.

Editor's note: This publication ran earlier in the year and we are repeating it here because it proved, judging by reader reaction, to be one of the most popular articles carried since January. 

Mike Moodie, head of RBC Wealth Management UK, discusses how being Canadian has helped the firm – and its peers – gain valuable brand traction.

As they jostle to stand out from their peers in an increasingly crowded marketplace in developed markets and break into new, emerging ones, wealth management firms are becoming ever more aware of the importance of having a strong, trusted brand. Recent years have however caused a big shake-up in the brand stakes, and it may surprise some readers to know that Canadian firms are a standout group which are rocketing up the rankings.

A key measure of the winners and losers in terms of banking brands is the BrandFinance Banking 500, which compares and ranks the world’s biggest institutions in terms of their brands’ values (BrandFinance uses the “royalty relief” method to calculate how much a bank would have to pay to lease their brand if they did not already own it.)

The headline from this year’s ranking was that Bank of America had fallen off its pedestal as the world’s most valuable banking brand to be supplanted by HSBC. The other big news, however, was the ascendancy of brands from China and Canada, with the performance of banks from these countries standing in stark contrast to their European counterparts. Driven in large part by the economic woes of the eurozone, European banking brands saw their halos slip to the extent to which banking brands from the BRIC countries (Brazil, Russia, India and China) now outnumber their European counterparts among the top 20 banking brands, and 16 out of the 20 “fallers” in the table were European brands.

Big wins for Canada

While Canadian banks in general stood out as winners in the 2012 Banking 500 rankings, by far the biggest success story was a bank which is increasingly on the radar of high net worth clients all around the globe: Royal Bank of Canada. And its wealth management business is wasting no time in hammering home its advantage in numerous markets as it expands, says Mike Moodie, head of RBC Wealth Management UK. In one huge expansionary move, earlier this month the firm announced that it was to acquire the Latin American, Caribbean and African private banking business of Coutts, the wealth management arm of Royal Bank of Scotland Group.

Having embarked on its first global advertising campaign aimed at the HNW and their advisors last autumn, RBC Wealth Management will no doubt be delighted that this year its parent bank was the biggest climber in the Banking 500 rankings, rising from twenty-eighth place in 2011 to just nudge into the top 20 for the first time. For Moodie, RBC’s entrance into the top twenty biggest-hitting brands is no surprise, forming as it does, part of a global raising of awareness about Canada’s banks.

"The BrandFinance results definitely reflect what we're hearing in the market at the moment: that potential clients and employees alike are attracted by our strong brand. An important part of this attraction is due to our Canadian heritage, which I'm sure explains why the other Canadian banks also fared so well in the report,” said Moodie.

The issue of valuing brands is of course a complex one, but one part of the puzzle is the brand strength of a financial services institution’s home country.

RBC Wealth Management’s new multi-year global ad campaign is “very much about building awareness of RBC as a top-ten wealth firm,” Mark Fell, head of strategy, brand and marketing at RBC Wealth Management, has previously told WealthBriefing. (The firm was ranked sixth globally in Scorpio Partners’ KPI Benchmark Report for 2011.) But while this is an important accolade and foundational to the campaign, it is mainly a “broad awareness campaign playing up the strength and stability of both Canada and RBC in these uncertain times,” Fell said.

It is these perceptions of strength and stability which are doubtlessly what is behind the ascendancy of Canadian banking brands in this year’s Banking 500 rankings: Canadian banks were some of the best performing, with four of the five brands gaining the most value being Canadian. In fact, Canadian financial institutions are now generally very well-regarded internationally due to the strength of the country’s financial sector, which thanks to prudent regulation and conservative investment practices weathered the crisis markedly better than those of the US and Europe.

Moodie highlights two examples of the global recognition of the country's stability, citing how Canada has been rated top for the soundness of its banking system for four years in a row by the World Economic Forum, and pointing to the appointment last year of Mark Carney, Governor of the Bank of Canada, as Chairman of the G20's Financial Stability Board.

Expansionary moves

The producers of the Banking 500 said in their report that RBC has been provided with a good opportunity to take its brand overseas and capitalise on a “cautious approach to banking which is a very strong selling point of any brand when trust in banks is low.” But it would seem that the bank’s wealth division is, as they say, well ahead of them here.

In recent months Moodie has really been clocking up the air miles to promote RBC Wealth Management in international markets, with the Middle East being a particular focus. And when it comes to the Canadian banking story, and RBC Wealth Management, clients both in the ME and elsewhere are “all ears”, says Moodie.

Moodie says that many of the clients and prospects who he met in the Middle East had never heard of RBC before, but ironically this is actually a good thing, as it “means that they hadn’t been hearing bad things” (referring, of course, to the government bailouts and scandals to have hit many of the world’s biggest banking names in the past few years).

For Moodie, now is a great time to make sure that the HNW in new markets like the Middle East have heard about RBC. For him, it’s natural that wealthy clients should be looking at the strength of a wealth manager’s parent bank, and its domestic banking system when considering where to park their money. “People are certainly taking note of parents’ credit ratings”, he said, adding that “money will certainly move from where it feels insecure to where it’s secure.”

Like its main Canadian competitors, Toronto Dominion, Scotiabank and Bank of Montreal, RBC could be said to be revelling in a reputation for conservatism, although pre-crisis this approach was met with a certain degree of scorn by some. Hindsight has proven Canada’s banks right to have avoided some of the “racier” investments which US and European banks fell foul of during the crisis, but there was a time that RBC came under scrutiny for not taking advantage of some of the (seemingly) lucrative opportunities which were out there, he explains.

However, there is more than just the enviable strength of Canada’s banking system behind the bouyant mood at RBC Wealth Management, explains Moodie. “We believe that we have the greatest opportunity to take advantage of this international recognition thanks to our position as Canada's largest financial institution, and as the only major Canadian bank with a global wealth management division,” he said.

The wealth management push

Conservative RBC may have been, but shy about its intentions to expand internationally it is not. Along with its capital markets and asset management divisions, “the bank has been very public about getting behind wealth management”, says Moodie, adding that “the growing strength of the RBC brand outside of North America is a fantastic asset to have as we look to expand our wealth management business in competitive markets including the UK."

RBC Wealth Management’s expansionary drive in the UK has been particularly marked in the past year or so: a few months back the firm moved to plush new London headquarters at Riverbank House. In fact, the UK has become a stand-alone area of focus at the firm next to Canada, the US and emerging markets, and the firm plans to triple its number of relationship managers in the UK to 100 by 2015.

Although RBC is clearly going after a diverse client base, it may be surmised that the firm is snapping up expat US citizens who may be disillusioned with the Wall Street giants, but who also need a wealth manager which is on good terms with the SEC and is not “running scared” from the somewhat draconian measures coming in under FATCA.

In fact, RBC Wealth Management views FATCA as an opportunity rather than a threat since it already has the expertise in place to deal with the legislation while many firms are withdrawing services for US citizens rather than deal with the added compliance headache they bring with them. The fact that US expats may become “homeless” due to FATCA has been discussed at length by this publication, and it is certainly refreshing to hear a firm talking about FATCA as an opportunity for growth rather than a cause for hand-wringing.

With regards US clients, RBC Wealth Management is in many ways in an enviable position of being “at one” with US compliance, but without the slightly tarnished reputation of some big US firms, so many of whom played fast and loose with the US housing market and came off the worse for it. We should also consider the “US brand”, which despite still being the world’s number one nation brand in BrandFinance’s rankings has been on the wane. In brand terms the US had a very bad year in 2011, losing over half a trillion dollars in value and being downgraded from a brand value of AA to AA-.

Significantly, the US now has a nation brand rating lower than Canada – yet another fillip to Canadian institutions which are looking to snap up market share. The Wall Street giants may not like to hear it, but RBC’s brand is riding high off the back of being North American, but not American.