Securities Law & Instruments


National Policy 11-203 Process for Exemptive Relief Applications in Multiple Jurisdictions -- Exemptions from applicable registration and prospectus requirements provided to permit U.S. bank to offer U.S. dollar deposit accounts and services to Canadian residents, including those Canadian residents that have been referred or introduced by a related Canadian bank.

Statutes Cited

Securities Act, R.S.O. 1990, c. S.5, as am., ss. 74(1), 25, 53.


July 20, 2016




The securities regulatory authority or regulator in each of the Jurisdictions (the "Decision Maker") has received an application from the Filer for a decision under the securities legislation of the Jurisdictions (the "Legislation") for an exemption for the Filer from the Registration Requirement and the Prospectus Requirement in respect of the deposit-taking activities of the Filer with Canadian residents (the "Exemptive Relief Requested").

Under the Process for Exemptive Relief Applications in Multiple Jurisdictions (for a dual application):

(a) the Autorité des marchés financiers is the principal regulator for this application,

(b) the Filer has provided notice that section 4.7(1) of Multilateral Instrument 11-102 -- Passport System ("MI 11-102") is intended to be relied upon in British Columbia, Alberta, Saskatchewan, Manitoba, Nova Scotia, New Brunswick, Prince Edward Island, Newfoundland and Labrador, Yukon, the Northwest Territories and Nunavut (the "Other Jurisdictions"), and

(c) the decision is the decision of the principal regulator and evidences the decision of the Ontario Securities Commission.


Terms defined in National Instrument 14-101 Definitions and MI 11-102 have the same meaning if used in this decision, unless otherwise defined.

In this decision, the following additional terms have the following meanings:

"Act" means the Securities Act (Québec);

"Bank Act" means the Bank Act (Canada);

"City National" means City National Bank;

"FDIC" means the United States Federal Deposit Insurance Corporation;

"FRB" means the United States Federal Reserve Board;

"OCC" means the United States Office of the Comptroller of Currency;

"OSA" means the Securities Act (Ontario);

"OSFI" means the Office of the Superintendent of Financial Institutions;

"RBC" means Royal Bank of Canada; and

"US Deposit Accounts" means the United States dollar deposit-taking chequing and savings accounts issued by City National.


This decision is based on the following facts represented by the Filers:

1. RBC is a Schedule I Bank under the Bank Act and is subject to extensive governance expectations and regulatory oversight of, in particular, the OSFI.

2. City National is a United States national banking association chartered by the OCC under the United States National Bank Act and an indirect wholly-owned subsidiary of RBC. City National was indirectly acquired by RBC on November 2, 2015 as a result of the merger of City National Corporation, the parent holding company of City National, with and into RBC USA Holdco, a wholly-owned U.S. bank holding company subsidiary of RBC, with RBC USA Holdco being the surviving corporation.

3. City National carries on the business of banking in the United States. It offers a full complement of banking, trust and investment services through 75 offices, including 16 full-service regional centers, in Southern California, the San Francisco Bay Area, Nevada, New York City, Nashville and Atlanta. City National's business includes the offering and/or maintenance of US Deposit Accounts services to a small number (approximately 248 as of October 2015) Canadian residents, including Québec and Ontario residents (the "Canadian Customers").

4. The primary federal regulator of City National is the OCC. City National is also a member of the US Federal Reserve System and is subject to the regulatory oversight of, inter alia, the FRB. Each of the OCC and the FRB is a regulatory authority created under the federal laws of the United States.

5. City National is subject to continual, ongoing bank supervision, examination and audits by the OCC. City National must file periodic reports with the OCC and the FRB concerning its activities and financial condition. In addition, City National must obtain regulatory approvals from the OCC prior to entering into certain transactions, such as mergers with, or acquisitions of, other financial institutions. The OCC has been granted extensive discretionary authority under the laws of the United States to assist it with the fulfillment of its supervisory and enforcement obligations. It exercises this authority for the purpose of conducting periodic examinations of City National's compliance with various regulatory requirements, including minimum capital and consumer disclosure requirements, and to establish policies respecting the classification of assets and the establishment of loan loss reserves for regulatory purposes.

6. As a result, City National is subject to a comprehensive scheme of regulation and supervision in the United States which the Filer believes is comparable to the regulatory framework governing Schedule I and Schedule II banks pursuant to the Bank Act and the supervisory responsibilities of OSFI.

7. In addition, deposits held by City National are insured by the FDIC under the United States Federal Deposit Insurance Act, as amended, and the regulations promulgated thereunder, for up to US$250,000 at this time per depositor (deposits owned by the same depositor may be combined for purposes of calculating this limit). City National and other United States federally insured depository institutions are required to pay premiums for this deposit insurance. The FDIC deposit insurance is guaranteed by the United States Treasury Department.

8. It is contemplated that the US Deposit Accounts may in the future be marketed in Canada by RBC to RBC's Canadian Customers. It is currently anticipated that any such marketing activities would consist of the delivery of information regarding City National deposit account services to select Canadian Customers and referring those Canadian Customers to City National's U.S. based sales team.

9. In addition, RBC employees may in the future, to the extent permitted by the Bank Act, engage from time to time, in certain clerical steps to facilitate the opening of the US Deposit Accounts in the United States by Canadian Customers. It is currently anticipated that these clerical steps would be operational and administrative in nature and would include, for example, providing account documentation to Canadian Customers who wish to open a US Deposit Account and providing information relating to such Canadian Customer to City National to facilitate a discussion between City National and the Canadian Customer.

10. To the extent permitted by the Bank Act, RBC may also in the future, engage in additional referral activities and may take a more proactive role in City National's relationship with its customers ("Referral Arrangements"). Any compensation received by RBC or paid by RBC to its employees in connection with such Referral Arrangements would be in accordance with RBC's bank policies and practices and would be disclosed to the Canadian Customer (including the Referral Arrangement and the method of calculating any fees arising from such Referral Arrangement) prior to the opening of a US Deposit Account.

11. The offering of the US Deposit Accounts by City National to Canadian Customers constitutes a distribution of securities as a result of City National's unique status under the Bank Act, and the meanings attributable to the terms "security" and "dealer" under the legislation, and the corresponding provisions of the applicable legislation in the Other Jurisdictions. As a result, City National is subject to the Prospectus Requirement and the Registration Requirement.

12. Although City National is an indirect subsidiary of RBC and is engaged in the business of banking in the United States, it is not a Schedule I, Schedule II or Schedule III bank for purposes of the Bank Act. As a result, Canadian bank exemptions under the Act and the OSA are not available to the Filer in these circumstances.

13. The US Deposit Accounts are, and will be, issued in compliance with applicable US law, including applicable anti-money laundering and consumer protection legislation.

14. The US Deposit Accounts are, and will be, insured by FDIC for up to the maximum applicable FDIC deposit coverage amount.

15. The US Deposit Accounts offered to Canadian Customers would not contravene any Canadian federal or provincial deposit-taking legislation or any provision of the Bank Act.

16. The US Deposit Accounts that are offered to Canadian Customers would be subject to the same regulation and oversight by the OCC and FRB as US Deposit Accounts that would be offered to residents of the United States.

17. Other than in compliance with Canadian securities laws, City National will not trade in any securities other than US Deposit Accounts with or on behalf of persons or companies who are resident in Canada.

18. Except for the inadvertent activities described in paragraph 3, the Filer is not in default of securities legislation in the Jurisdictions or any of the Other Jurisdictions.


Each of the Decision Makers is satisfied that the exemptive relief application meets the test set out in the Legislation for the Decision Makers to make the decision.

The decision of the Decision Makers under the Legislation is that the Exemptive Relief Requested is granted provided that:

a) RBC continues to be subject to regulation, examination and supervision by the OSFI;

b) City National continues to be subject to regulation, examination and supervision by the OCC and/or the FRB;

c) the US Deposit Accounts are insured by the FDIC up to the applicable coverage limits under the FDIC rules, regardless of the residence or citizenship of the holder of a US Deposit Account;

d) the details of the FDIC insurance coverage in respect of the US Deposit Accounts are disclosed to each prospective holder of a US Deposit Account prior to the opening of the US Deposit Account; and

e) prior to the opening of the US Deposit Account or the making of an initial deposit therein, City National or RBC would inform the Canadian Customer of any Referral Arrangements between City National and RBC relating to the US Deposit Account, including the method of calculating the fees received by RBC, if any, arising from such Referral Arrangement.

"Lucie J. Roy"
Senior Director, Corporate Finance