RBC’s rich UK wealth swoop may not be the last

The Royal Lender of Canada logo is observed in Toronto, Canada, January 22, 2015. REUTERS/Mark Blinch

LONDON, March 31 (Reuters Breakingviews) – It’s generally greater to be a prosperity manager than their consumer. Which is surely the circumstance for Brewin Dolphin (BRW.L), which has just accepted a 1.6 billion pound ($2.1 billion) takeover from Canadian giant Royal Lender of Canada (RY.TO). That is equivalent to a whopping 62% premium, and valued Brewin at nearly 3% of its belongings less than administration.

The rich rate implies some significant lifting. To justify the around 600 million pound premium, RBC would need to get out around 20% of previous year’s fees, in accordance to a Breakingviews calculation which values synergies on a numerous of 10. Nevertheless RBC’s existing United kingdom wealth management organization is modest, restricting overlap. There may be some locations to increase revenues: say by featuring Brewin customers banking goods or accessibility to RBC’s exploration. Still, RBC’s approach for 9% revenue growth seems bold following to analysts’ 6% forecasts for Brewin more than the following a few a long time, according to Refinitiv details.

Even now, the British isles prosperity management sector is beautiful to overseas buyers: it is rather fragmented and developing swiftly as punters take greater handle of their discounts. The 12% bump in the share rate of rival Rathbones (RAT.L) on Thursday indicates a lot more discounts could arrive. (By Neil Unmack)

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