ROYAL TRUST PLOTS AGGRESSIVE GLOBAL EXPANSION
<Royal Trustco Ltd>, in a move unique
among Canadian trust companies, is pursuing a bold global
expansion that could someday lift the foreign share of its
yearly earnings to 50 pct, president Michael Cornelissen said.
    First Marathon Securities Ltd financial services analyst
Michael Walsh said Royal Trust's international growth target is
attainable. But it "will be a tremendous achievement because
... they're going to have to build an international earnings
base larger than the earnings of a lot of significant domestic
trust companies," Walsh said.
    Global operations, which made up 22 pct of Royal Trust's
154 mln dlr 1986 net profit, will post 33 pct profit growth
this year against an expected 15 pct jump in total company
profit, Cornelissen told Reuters in an interview.
    He said the foreign share of total profit would rise to 26
pct in 1987 and to 44 pct by 1990.
    Royal Trust, Canada's second largest trust company with
assets of about 19.54 billion Canadian dlrs, has operated
internationally since 1929 when it opened a London bank.
    Its aggressive global strategy began in the 1980s, when
other Canadian trusts, the equivalent of U.S. savings and
loans, were focusing on domestic retail banking.
    The company's overseas ambitions were whetted by heightened
domestic competition and impressive growth at its London bank
operations, which attained full British banking powers in 1980,
Cornelissen said.
    Last year, Royal Trust moved into continental Europe and
Asia with its 239 mln Canadian dlr acquisition of Dow Chemical
Co <DOW>'s Dow Financial Services Corp, which included asset
management, merchant and private banking companies.
    "It was a heaven-sent opportunity," Cornelissen said of the
Dow Financial acquisition. "We achieved in one year what would
otherwise have taken five to 10 years to set up."
    Cornelissen stressed that Royal Trust would shun direct
competition with major global financial institutions in
activities such as international lending and stock brokerage,
in order to exploit "profitable niches" overseas in traditional
trust activities such as asset management, private banking and
advisory services.
    He said that Royal Trust hoped to complete negotiations
"before the end of this month" to sell its London-based Savory
Milln brokerage, acquired in the Dow Financial deal.
    "The international market is so big and we have such a
miniscule share of it that growth opportunities are really
limited only by our energy and our desire to find more
business," he said, adding that in trust-type services, "we
don't think the international markets are well-served."
    Aiding Royal Trust's foreign growth are greater foreign 
investment interest in North America and increased Canadian
investment abroad, Cornelissen said.
    Central to Royal Trust's strategy is Asia, boasting rapid
economic growth and huge pools of Japanese capital, said
Cornelissen, whose company administers assets of 71.85 billion
dlrs, more than any other Canadian trust.
    Citing statistics indicating that by the year 2000, Asia
will contain two-thirds of the world's population and 50 pct of
global productive capacity, Cornelissen said, "We knew we had
to be there." Royal Trust's 14 international locations include
offices in Tokyo, Hong Kong and Singapore. The company also
recently listed its shares on the Tokyo Stock Exchange.
    The Royal Trust president said the company was stressing
growth within its overseas units, adding he did not foresee any
acquisitions in the "immediate future," although "we have our
eyes wide open for the right opportunities."
    Asked about Royal Trust's plans for the U.S., which the
company abandoned with the 1983 sale of its Florida bank units,
Cornelissen said the company faced a trust services market well
covered by hundreds of small regional banks.
    "That doesn't mean to say we shouldn't be in the U.S.,"
said Cornelissen. "That is probably one area that we will
probably do something with in the next five years."
    He said the company would continue to emphasize its home
Canadian market, which Cornelissen and financial services
analysts agreed would remain vital to Royal Trust.
    Proposed government regulations to allow Canadian banks,
trusts, insurance and securities dealers full participation in
one another's actitivies will mean more domestic competition
for Royal Trust, "but not drastically more," Cornelissen said.
 Reuter
