Nixon says he took his time because he wants to get it right. “You can move quickly and make the wrong decisions, or you can exercise patience and make the right ones.” He says he “tends to think in five-year chunks.” But that doesn’t mean he’s done nothing. Two years ago, Nixon says, he took his first stab at changing RBC’s sales culture and downsizing its bureaucracy. Done gently and without fanfare, it focused on reorganizing RBC into employees serving two basic clients: consumer and wholesale. It didn’t work. “When it came to looking at the customer, we made great strides,” he says, steering the subject away from the exact source of internal resistance. What Nixon will say is that after reviewing 2003 results, he concluded that he could finally let ’er rip. Hence the hiring of Boston Consulting Group as well as an executive search firm, and all the management surveys, retreats, brainstorming sessions and reports that followed. He worked mostly alone, using one or two directors whom he won’t name—although one is thought to have been non-executive chairman David O’Brien—as advisers. In early September, Nixon took his ideas to the Royal’s board, and received approval to start putting his plan in place.

Heads have rolled: chief risk officer Suzanne Labarge went quietly, offering to take early retirement when she got wind of Nixon’s plans; Jim Rager, head of RBC banking and the executive in charge of Centura Bank, the least successful of the U.S. acquisitions, was persuaded to do the same. Doce Tomic, head of wealth management, quietly resigned a week later.

Chief financial officer Peter Currie—one of the most experienced and respected banking executives in Canada—was a different story. News of his departure shocked the banking community, prompting speculation that Nixon’s working relationship with Currie, never as collegial as the rest, might have deteriorated to the point where it triggered the entire executive shuffle.

An RBC spokesman dismissed the speculation and added that Currie was invited to stay as CFO, but chose to leave. Nixon, however, acknowledges that the bank did not give Currie much encouragement. “Peter and I worked together very effectively for a number of years,” Nixon says. “But under the new structure there was no role for him, except in his existing job.” This would have been a significant demotion since he would not be part of the inner executive group, and he’d be reporting to the bank’s new chief operating officer rather than to Nixon. Fell, non-executive chairman of RBC Capital Markets, speaks more plainly: “You don’t make a change like that if things are going smoothly. You can draw your conclusion from that.”

It seems reasonable to conclude that the effective dismissal of an executive of Currie’s calibre means that Nixon is assembling a management team that will follow his lead and do things his way. Organizationally, here’s how RBC looks now. Cleghorn’s five operating units have been cut down to three: consumer, headed by former RBC Insurance president Jim Westlake; wholesale or capital markets, which will continue to be run by Winograd; while Peter Armenio, formerly president of RBC Investments—and another career investment banker—heads up a U.S. operating division designed to address the specific needs of those assets and markets. The sprawling group management committee has been shrunk and renamed executive group. Meanwhile, Nixon has slashed and condensed layers of bureaucracy to structurally eliminate as much duplication as possible. What’s left will be in the hands of only five senior people, including the second-in-command, who have stepped into Labarge’s and Currie’s shoes, all of whom will report to Nixon’s newly appointed COO, Barbara Stymiest.

“People are talking as if here’s this lady who came out of left field,” says Gluskin, the investment manager. “Whereas Barbara Stymiest is very solid. She was,” and he pauses for emphasis, “the president of the Toronto Stock Exchange. She’s been working with these guys on one thing or another, going to dinner with Paul Martin, for years. They’ve been scrutinizing her performance for years. Nobody’s in for any surprises.”

Moreover, Stymiest may not have conventional banking experience, but she has, people say, lots in common with her new boss. Like Nixon, she’s described as intelligent, capable, hard-working. They’re different, in that he began his career as a bond trader and rose through the ranks, whereas Stymiest started professional life as a chartered accountant. Like him, however, she has considerable investment banking experience, having been CFO at BMO’s Nesbitt Burns for seven years before leaving in the fall of 1999 to run what was then still the broker-owned Toronto Stock Exchange. Moreover, she’s demonstrated a similar talent for persuading cantankerous financial executives to co-operate—as amply illustrated by her being hired to run the exchange when it was owned by investment dealers, and managing to overcome all the squabbling and bickering to broker the plan that created the now independent public company. “She will be our strong functional czar,” Winograd says. Adds Fell: “She brings a discipline and an approach that will be good for us. And she carries no baggage from the past.”

Although the preponderance of investment bankers has some people worried that they will dominate the culture and the Royal will end up having adventures similar to those at CIBC, observers who know Nixon and Stymiest don’t anticipate this will be a problem. While Nixon retains a keen interest in corporate finance deals—in mid-August, while grappling with the restructuring and management issues, he nonetheless took the time to travel to Ottawa personally, on a Sunday, to ensure that RBC was first in line with a Petro-Canada sales pitch—he and Stymiest, as a team, are expected to put their enthusiasm for organizational effectiveness ahead of the excitement of being in on every big kill.

Which still leaves the contentious $8-billion question, or possibly questions: will all these changes make any difference to the profitability of the U.S. assets? And what impact will what Nixon’s Royal Bank does south of the border have on the perception of the bank back here at home?

The Royal’s position on the U.S. operations is this: they are not broke—many make money—but while revenue has grown steadily in many business segments, expenses have risen substantially faster. Obviously, this can’t continue. Individually, the bank says, the brokerages are doing well, and insurance is holding its own. Mortgage is a mess and they’re working on it: following a big mortgage powwow in Toronto last spring, efforts have been made to address the factors cutting into profits, which include the commissions paid to brokers, as well as old-fashioned processing bottlenecks that have led to exorbitant hedging expenses. This fall, RBC announced that Centura’s mortgage operations will be consolidated further on Jan. 1. In addition, Nixon has created a stand-alone U.S. division to manage everything from mortgage and insurance to banking and brokerage; with Armenio in charge of it, it is hoped this will enable RBC senior management to offer its new improved holistic approach to U.S. customers.

But there’s a problem with that plan: it may already be too late. “When Royal bought Centura, we figured this big Canadian bank would take all the different pieces and consolidate them. Move the head office from Rocky Mount [N.C.] to Charlotte or Raleigh, and establish a common brand identity selling a range of financial services,” says Anthony Plath, a banking professor with the University of North Carolina Charlotte. “That was probably John Cleghorn’s intention,” Plath says, “but when he stepped down, the bank simply did not follow through.”

He says that in 2000, Centura—a large regional player in the tobacco country that stretches from I95, the highway to Miami, to the coastal marshes—stood a good chance of becoming one of a number of super-regional players. Centura could have served as a pilot project in which to test Nixon’s notions of cross-selling, Plath says: it was already nimble, and was in a position to go up against top regional competitors such as Wachovia Corp. and BB & T Corp. But Plath says he watched, mystified, while competitors pushed into the market and the Canadians dithered. “They lost track of the big picture. They seemed preoccupied with making little things work, and putting out fires,” he says.

“Three, four years later, the bank feels barely open,” Plath says. The long view may work in Canada, “but in the United States, in this industry, if you can’t implement a business strategy in six months, you’re dead.”

Local management has been frustrated for years that Canadian control—for which they do blame Nixon—prevented them from effectively competing in a rapidly changing market. Since RBC bought Centura, Plath has watched four or five of his former MBA students struggle to implement exactly the kinds of changes Nixon talks about, only to quit in frustration. All now work for competing banks. “It isn’t the Americans that have been the problem,” Plath says, “it’s that the damn Canadians won’t get out of the way.”

RBC stands a chance of catching up to the competition. Aggressive branding and a smart sales push could close the gap, he says—the silver lining in the U.S. cloud is that when it comes to banks, Americans have no brand loyalty—but Plath isn’t optimistic. Centura’s newly appointed CEO has announced that he’s planning to move Centura’s HQ to Raleigh, but the sudden departure of predecessor Kel Landis—known as “Big Kel”—does not bode well for the company’s prospects, he says. Landis, 47, is a marathon runner who’s never before been known to walk away from a challenge. “We are not talking about a guy who’s ready to leave banking and write a book,” Plath adds.

New Centura CEO Scott Custer, who moved up from his position next in line to Landis, has reiterated the bank’s commitment to streamlining and cost-cutting. But Plath believes the reorganization in Toronto, including Armenio’s appointment, will only compound the regional problems. “They are getting bludgeoned by Wachovia and BB & T, and Royal Bank’s solution is to hand control over to a New York investment banker working out of Toronto who knows nothing about the southeastern banking business.”

If Plath is right, it could mean that Canadian proponents of the “fish or cut bait”—a.k.a. “go big or go home”—school of U.S. bank expansion are correct. RBC has bet more on its U.S. expansion than all its Canadian competitors combined, yet it’s still a drop in the vast U.S. bucket, and a marginally profitable one at that. If Nixon isn’t willing to do what’s necessary to duke it out with Wachovia, should RBC’s U.S. expansion strategy be written off as a failure, along with the billion dollars’ worth of goodwill from these acquisitions that’s on the bank’s balance sheet?
Maybe. Even so, it doesn’t mean either of those things is going to happen. RBC officials say that any year-end writedown of U.S. assets will be done only if it is deemed necessary. En route to Florida, Nixon wouldn’t speculate, reiterating the position he’s taken for months, which is that under strict new accounting rules, writedowns are no longer a matter of management discretion.

Nixon also dismisses the suggestion that the bank needs to buy more assets to offset the disappointing performances of the ones it owns now. “Forget acquisitions,” he says. “How do we enhance and improve what we have?” Nixon believes he’s finally headed in the right direction, and says he’ll stick with this as long as it takes—or until he runs out of energy, which, in his view, is going to be the determining factor in whether he leaves the Royal stronger and more profitable than he found it. That, and the even more valuable commodity: time. “You don’t change an organization like this overnight,” he says. “Even as CEO, you need an appropriate period in which to make your changes.” And even if he doesn’t get the time he needs, at least now nobody can accuse Gord Nixon of failing to let us know exactly what he wants.