NEW YORK (Dow Jones)-—The Royal Bank of Canada (RY.T, RY), relatively unscathed by the financial crisis that pummeled its American rivals, will name a new head of U.S. investment banking on Tuesday as part of a push to aggressively expand this year.

Blair Fleming, who previously headed the bank's syndicated and leveraged finance operations, said he will take the new job with a clear mandate. Canada's biggest bank plans to grow the balance sheet of its U.S. capital markets business by 50% within the next 18 months.

That's a bold move for RBC Capital Markets, which is still a relatively new player in the U.S. after its 2001 acquisition of investment bank Dain Rauscher. However, the goal fits into a larger trend by Canada's big banks to take advantage of Wall Street's turmoil to buy bank assets cheaply and recruit bankers from ailing competitors.

"Our balance sheet is in excellent shape, unlike some other banks," Fleming told Dow Jones Newswires. "We have a strong financial position with a triple-A credit rating, and that's resonating incredibly with clients."

RBC Capital Markets, which drives about one-third of Royal Bank of Canada's profit, posted revenue of $6.7 billion last year. The business, which was mostly known for serving the middle market, has also been gunning for larger clients. It was an adviser on three of the globe's biggest leveraged buyouts in 2009, including IMS Health's $4 billion acquisition by private-equity firm TPG and the Canada Pension Plan.

Fleming will also announce on Tuesday that RBS Capital Markets hired 15 senior bankers since December, including Michael Coyne of Piper Jaffray (PJC), James Caldwell of Bank of America Corp. (BAC), and Jeff Gelles of UBS (UBS).

Other top talent has been lured from rivals like Credit Suisse (CS), JPMorgan Chase & Co. (JPM), and Deutsche Bank (DB) to create two new groups within its U.S. investment banking business covering transportation and restructuring, along with key hires in leveraged finance.

The new hires come on top of more than 300 that were added in 2009. RBC Capital Markets has 5,000 employees globally, with a little more than 2,000 based in the U.S.

The addition of more staff helps keep RBC Capital Markets competitive as rivals, especially boutique investment banks, ramp up this year. Midsize advisory and investment management firms, such as Evercore Partners Inc. (EVR) and Sanford C. Bernstein, have made inroads in the past few months to build equity-capital markets businesses.

The shake-up for U.S. investment banks-–with the collapse of Lehman Brothers and the acquisitions of Bear Stearns and Merrill Lynch-—has opened the door for new entrants to the market. Analysts project that areas like research, sales and trading, and other activities will continue to rebound in 2010 as the markets heal.
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