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The Canadian bank, however, did not disclose how much capital it had injected into the unit.
“This is part of the management actions that RBC is taking on the path to improving profitability at City National” an RBC spokesman told Reuters.
RBC, which bought City National in 2015 for $5.4 billion, said in August that the subsidiary’s losses in the third quarter stood at $38 million, compared with a profit of $102 million a year ago.
Those losses materialized as “everything went against us this quarter,” RBC CEO Dave McKay told analysts last month, largely arising from a credit loss on a real estate item, higher costs and rising deposit betas, which measure the sensitivity of a bank’s deposit cost to changes in short-term interest rates.
California was the initial epicenter of a U.S. regional banking crisis triggered by the collapse in March of Santa Clara-based Silicon Valley Bank.
RBC has also hired Greg Carmichael, the former CEO of U.S. regional lender Fifth Third Bancorp (NASDAQ:FITB), to sit on City National’s board.
RBC also said recent intercompany sales of certain debt securities by City National will result in the recognition of realized losses at the unit, which will be “eliminated at the Royal Bank of Canada consolidated level.”
KBW analyst Mike Rizvanovic said the move resembles “an internal bailout.”
“We expect little impact on RBC at the all-bank level, although the need for such measures is a negative read-through on City National’s health,” Rizvanovic said.
