Bank to the Stars Becomes $10 Billion Headache for Owner RBC (1)

Royal Bank of Canada wanted to return to the US personal and commercial banking business, and City National Bank seemed to have it all: wealthy Hollywood clients, a foothold in the massive California market and a long history of churning out profits.

Now, almost a decade later, City National has become a $10 billion headache. That’s roughly how much Royal Bank, Canada’s largest lender, has poured into its US subsidiary — an initial purchase price of $5 billion, followed by a series of hefty capital injections.

Regulatory filings by Los Angeles-based City National shed light on why the “bank ...