Our RBC Capital Markets segment provides a wide range of corporate and investment banking, sales and trading, research and related products and services to corporations, governments, and large commercial and institutional clients.

Throughout 2005, we continued to build a strong global franchise with steady growth and earnings. We are focused on achieving our four strategic objectives, which are to:

At the end of 2005, RBC Capital Markets stands as a leader in the Canadian capital markets. Despite weak equity markets, we made considerable progress in building a mid-market client base in the U.S., particularly in energy and real estate, two sectors in which we have proven expertise. The year also saw the creation of a truly global fixed income business, giving clients access to the best funding and investing opportunities around the world.

Structured products developed by RBC Capital Markets drive revenue growth for our distribution businesses that serve affluent individuals, high net worth clients and institutional investors, all served by diversified distribution networks across our businesses around the world.

Global Markets
Global Markets consists of debt, money market, foreign exchange, derivatives, alternative assets, private debt and equity and proprietary trading. Recognizing that clients need full access to global debt markets and currencies, we have been investing in this strategically important business. This year, we integrated RBC Dain Rauscher’s fixed income operations into our Global Markets business. This combined capability, coupled with a global distribution network, enabled us to lead in such transactions as the oversubscribed US$1 billion debt issuance by Germany’s largest development agency, Kreditanstalt für Wiederaufbau Bankengruppe.

We expanded the number of electronic debt trading platforms we offer to clients. By the end of calendar year 2005, we expect to add two new electronic trading platforms, Market Access and Trade Web, bringing the number of trading platforms available to our clients to six.

The ongoing expansion of our structured products business is in the service of clients who seek to arbitrage the risks of doing business across borders and currencies. In 2005, we expanded our structured products platform to support structured credit derivatives and structured interest rate derivatives in Tokyo, expanded our U.K. capabilities and moved into new markets.

We also broadened our menu of structured products for the retail market, with the introduction of commodity-linked notes that provide investors returns based on commodities prices such as aluminum, crude oil, copper, lead, natural gas, nickel and platinum.

We are proud of our strength in Australian dollar and Sterling bonds and our global leadership as a trader of Canadian currency. We continue to rank as the leader in Canada in all aspects of the debt market and have made significant inroads in the U.S. fixed income market, as evidenced by leading rankings in the U.S. municipal finance sector.

In the United Kingdom, RBC Capital Markets is one of only nine market-making members of the London Bullion Market Association – clear recognition of our interbank market-making services in gold and silver spot, forwards and options contracts. Our infrastructure business is growing as governments seek to privatize activities that were traditionally government-run.

Global Investment Banking and Equity Markets
These operations comprise corporate and investment banking, and equity sales and trading businesses.

In Canada, we are committed to being the number one choice for Canadian corporations. Our success is based on a long history of helping Corporate Canada grow through new capabilities like electronic trading, new structured products, and a greater presence in key markets like the U.S.

We are also building our investment banking and equity markets business in the U.S. This growing North American capability enabled us this year to lead in such transactions as the largest equity financing for any U.S. independent oil company in 2005.

Institutional & Investor Services
This business provides custody and investment administrative services to corporate and institutional investors worldwide.

In June, we announced the creation of a joint venture, RBC Dexia Investor Services, which will significantly expand our already strong custody operations. The company will have approximately US$1.8 trillion in client assets under custody, rank among the world’s top 10 global custodians and offer a complete range of investor services to institutions around the world. The transaction is expected to close in fiscal 2006.

For the second consecutive year, our Institutional & Investor Services was ranked number one in the world for Global Custody Services in the Global Investor magazine 2005 Global Custody Survey.

Other
The Other line of business consists of National Clients group, Research, and, aggregated under Global Credit, the non-strategic lending portfolio and centralized management associated with the segment’s core lending portfolios.

Our National Clients group was created in the fall of 2004 to help RBC Capital Markets build a leading reputation in serving the needs of the Canadian mid market – companies with revenue in excess of $100 million. These firms can be more successfully and efficiently served by higher skilled relationship management and more direct access to products and services typically available to corporate clients. In its first year of business, the National Clients group has performed above expectations by providing clients with growth strategies and access to both the capital markets and related products and services.

The RBC Capital Markets Research division provides research, analysis and recommendations to clients about the Canadian and U.S. equity markets, the global foreign exchange, fixed income and credit markets as well as views on industry sectors, global economic trends and performance. Our analysts and the research they produce are respected globally for their insight, depth and objectivity.