Corporate

Corporate & Investment Banking

Chuck WinogradChief Executive Officer

Presentation to Analysts & Institutional Investors

October 22, 2001Toronto

1

Business focus

Wholesale banking and advisory unit of RBC Financial GroupEncompasses:� Corporate and institutional business of

Dominion Securities� Royal Bank’s corporate banking business� Capital markets business of Dain Rauscher

Corporation� Reorganized private equity business of RBC

Financial Group

2

$379

$502

$390 $387

1999 2000 9 mos '00 9 mos '01

1 Excluding special items

Net income1 & contribution to total bank net income(in C$ millions)

21%23%

24% 22%

Business performance

3

Performance by division

-20%

0%

20%

40%

60%

80%

100%

1999 2000 9mos '00 9mos '01

Global MarketsGlobal EquitiesGlobal BankingDRW

RBC Capital Partners

Contribution to RBC Capital Markets total revenue

4

Geographic diversification

After-tax profits

1999 2001 YTD

International Domestic

42% 58%

International Domestic

49% 51%

5

Existing organization structure

2001Global Banking

GlobalEquity

GlobalMarkets

RBC CapitalPartners

Dain RauscherWessels

Corporate Finance

Mergers &Acquisitions

Equity Capital Markets

Lending & Structured Finance

Loan PortfolioManagement

Loan AdministrationSecuritization

Loan SyndicationLoan Trading

Equity Research

Equity Sales &Trading

Equity Derivatives

Foreign ExchangeMoney Market

Funding & BalanceSheet Management

Debt & CreditDerivatives

Fixed Income

High Yield

Private Equity

Mezzanine Debt

Corporate Finance


Equity CapitalMarkets

Equity Research


6

New organization structure

Capital MarketServices

Global FinancialProducts

Global TreasuryServices

GlobalCredit

RBC CapitalPartners

Corporate Finance



Equity Derivatives

Foreign Exchange

Money Market


Private Equity

Mezzanine Debt

Effective November 1, 2001

RelationshipLending

Structured Finance

Equity Research


Fixed Income

High Yield


SecuritizationLoan Syndication

Loan Trading

Relative ValuePortfolio

Loan Administration

Mark to Market

DemarketPortfolio

7

Canadian market size

Canadian market growth

Extensive existing market share

Core strategic and structural issues

8

Canadian M&A (14 of top 20 transactions) First

Equity Underwriting 14%

Debt underwriting 21%

Equity Trading 15%

Bond Trading 13%

Syndicated Loans (agent only) 36%

Domestic market share positions as high as any in the free world

(Y2000)

Extensive market share in the domestic market

9

Reducing Canadian companies- an example

Oil and Gas Producers (TSE 300 Composite Index

Company Name Relative Weight onComposite (%)

Northrock Resources (55%) 0.05Northstar Energy 0.05PanCanadian Petroleum (13%) 0.13Petromet Resources Ltd. 0.04Poco Petroleums 0.32Paramount Resources Ltd. (51%) 0.10Probe Exploration Inc. 0.01Penn West Petroleum 0.21Rio Alto Exploration 0.26Renaissance Energy 0.50Ranger Oil 0.13Rigel Energy 0.11Reserve Royalty Corp. 0.01Talisman Energy 0.85Tri Link Resources 0.04Ulster Petroleums 0.10Vermillion Resources 0.04

Oil and Gas Producers (TSE 300 Composite Index

Company Name Relative Weight onComposite (%)

Alberta Energy 1.03Anderson Exploration 0.38Beau Canada Exploration 0.04Berkley Petroleum 0.20Bonavista Petroleums 0.05Baytex Energy Ltd. Cl A 0.05Cabre Exploration 0.04Chieftain International 0.06Canadian Natural Resources 0.51Crestar Energy 0.18Canadian Occidental (71%) 0.44Canadian 88 Energy Corporation 0.07Genesis Exploration Inc. 0.06Gulf Canada Resources 0.04Gulfstream Resources 0.03Canadian Hunter Exploration Ltd. (61%) 0.14Numas Energy (75%) 0.05Newport Petroleum 0.07

10

Reducing new company formation

IPOs – 1997 to 2001 Number Value ($ billions)

1997 106 11.6 1998 45 3.5 1999 36 4.8 2000 55 6.2

2001 (YTD) 25 3.0

Total Canadian MarketTotal Canadian Market

11

Integration of markets

Disappearance of borders

Growth is outside the country

U.S. equity performance

Access to U.S. equities market accepted fact in Canada

Our equities universe now North American, not Canadian

12

Convergence of capital markets

Lending and capital markets

High yield and equity markets

Equity markets and private equity

Convergence has more purely priced components of traditional securities -credit, option value, interest rate risk, etc.

13

The rise of structuring and customization

Convergence has created repackaging opportunities

Internal proprietary trading books provide R&D for customization

Customization and structuring provide answers to problems

Clients will pay for solutions

Need to focus cost structure away from commodity product

14

U.S. strategy synthesis

U.S. capital markets focus - purchase of Dain Rauscher Wessels

Time has come for integration

Integrated client solution driven

Broaden the DRW product line

Deepen the RBC DS product line with U.S. expertise and distribution

15

U.S. strategy synthesis

Full service provider in Canada; sustain and expand industry leading shareIndustry focused penetration in the U.S.

� energy� telecom� technology� health care

Mid-market focus in U.S. market for broad product range

� targeted megacap coverage for CAD$ and forex, and other customized product

Geographic spread of management

16

Restructuring the loan business

Large ticket loan business largely commoditized

Challenge to make this a real business

Substantial progress made in reducing exposures and cost structure over last three years

17

Loan exposure down 32%

Single names down from 1,400 to 1,000

Reduced staff by more than a third

Increased return criteria

Significant pruning of corporate loans

18

Restructuring the loan business

Split portfolio into “core” and “non-core” components - substantial reduction in client base

Fully allocate capital to core loans and impose strict minimum return criteria

Mark to market management system

Value added portfolio managed for risk-adjusted return

Total commitment to reducing loan losses

19

Non-interest expense control

2,300

2,350

2,400

2,450

2,500

2,550

2,600

2,650

2,700

1999 2000 2001 YTD0%

5%

10%

15%

20%

25%

30%

35%

40%

Core RBC DS staff countNon-interest expenses (ex. variable compensation) as % of revenues

1

1 Includes $78 million of restructuring, without is 33%

20

Recent initiatives

Structured finance capability in the U.K.

Securitization team

Credit derivatives in London & New York

High-yield in Greenwich

21

New organization structure

Capital MarketServices

Global FinancialProducts

Global TreasuryServices

GlobalCredit

RBC CapitalPartners

Corporate Finance



Equity Derivatives

Foreign Exchange

Money Market


Private Equity

Mezzanine Debt

2002

RelationshipLending

Structured Finance

Equity Research


Fixed Income

High Yield


SecuritizationLoan Syndication

Loan Trading

Relative ValuePortfolio

Loan Administration

Mark to Market

DemarketPortfolio

22

The RBC Capital Markets strategy

Maintain Canadian leadership position while building North American business

Mid-market U.S. focus with broad product portfolio delivered through industry expertise

Focus on structured value added solutions for clients

Continue to build global niche businesses

23

Caution regarding forward-looking statements

Royal Bank of Canada, from time to time, makes written and oral forward-looking statements, included in this presentation, the Annual Report, in other filings with Canadian regulators or the U.S. Securities and Exchange Commission, in reports to shareholders and in other communications, which are made pursuant to the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995. These forward-looking statements include, among others, statements with respect to the bank’s objectives for 2001, and the medium to long term, and strategies to achieve those objectives, as well as statements with respect to the bank’s beliefs, plans, expectations, anticipations, estimates and intentions. The words “may,” “could,” “should,” “would,” “suspect,” “outlook,” “believe,” “anticipate,” “estimate,” “expect,” “intend,” “plan,” and words and expressions of similar import are intended to identify forward-looking statements.

By their very nature, forward-looking statements involve inherent risks and uncertainties, both general and specific, and risks exist that predictions, forecasts, projections and other forward-looking statements will not be achieved. The bank cautions readers not to place undue reliance on these statements as a number of important factors could cause actual results to differ materially from the plans, objectives, expectations, estimates and intentions expressed in such forward-looking statements. These factors include, but are not limited to, the strength of the Canadian economy in general and the strength of the local economies within Canada in which the bank conducts operations; the strength of the United States economy and the economies of other nations in which the bank conducts significant operations; the effects of changes in monetary and fiscal policy, including changes in interest rate policies of the Bank of Canada and the Board of Governors of the Federal Reserve System; changes in trade policy; the effects of competition in the markets in which the bank operates; inflation; capital market and currency market fluctuations; the timely development and introduction of new products and services by the bank in receptive markets; the impact of changes in the laws and regulations regulating financial services (including banking, insurance and securities); changes in tax laws; technological changes; the ability of the bank to complete strategic acquisitions and to integrate acquisitions; unexpected judicial or regulatory proceedings; unexpected changes in consumer spending and saving habits; and the bank’s anticipation of and success in managing the risks implicated by the foregoing.

The bank cautions that the foregoing list of important factors is not exhaustive. When relying on forward-looking statements to make decisions with respect to the bank, investors and others should carefully consider the foregoing factors and other uncertainties and potential events. The bank does not undertake to update any forward-looking statement, whether written or oral, that may be made from time to time by or on behalf of the bank.

Corporate

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