TORONTO (CP) - Royal Bank (TSX:RY) announced its second U.S. acquisition in less than month Wednesday, scooping up American Guaranty & Trust, part of the National Life Group, for an undisclosed price.

The deal enables Canada's largest bank to carve out a bigger slice of the U.S. trust market, which is worth an estimated $1 trillion US, by providing a wider array of products and services to affluent American clients.

Royal already dabbles in U.S. trust services through securities firm RBC Dain Rauscher's alliance with Comerica Bank and Trust, but this deal rounds out its wealth-management offering by allowing clients to establish trusts for estate planning.

"This acquisition allows us to fill a hole that we had in the offering and so we now are in a better position to meet our clients' needs," said Michael Moodie, head of RBC global private banking in the U.S. and Caribbean.

"It's a nice message that we want to continue to grow in the U.S."

With more than 30 employees based in Wilmington, Del., AG&T administers more than 1,000 personal trusts and holds more than $1.3 billion in trust and investment accounts for its clients.

It is one of about 4,000 trust companies vying for dominance in the highly fragmented U.S. market, pitting Royal against well-entrenched regional players.

But Moodie said Royal is better poised to provide a greater breadth of integrated solutions for its high-net-worth American clients - including banking, investment management, advisory services and credit - adding that's where "regional banks sometimes lose out."

Lee Cheney, currently AG&T president and CEO, will become the head of RBC's U.S. trust business, reporting to Moodie.

The acquisition, which is not material to RBC, is expected to be completed by Sept. 29, pending regulatory approvals.

"It is consistent with their view of growing global private banking businesses," said Brenda Lum, a financial services analyst with Dominion Bond Rating Service.

"This gives them an opportunity because they already have some businesses in the U.S. that have high-net-worth clients, like their full-service brokerage. So this probably will help in terms of cross-selling products."

The AG&T deal also follows Royal's $456-million-US acquisition of Flag Financial Corp. (NASDAQ:FLAG) in Georgia that was announced in early August.

That transaction, conducted through RBC Centura, marks the subsidiary's first U.S. acquisition since late 2003 in a lucrative market that has proved troublesome in the past. In 2005, it exited its U.S. mortgage business after suffering operational challenges.

But analysts say the Toronto-based bank has since mounted a successful turnaround of its U.S. operations despite tough competition and the nibbling effect of the higher loonie. The division booked a 39 per cent increase in profits in its latest quarter, propelling RBC's overall third-quarter earnings to a record-smashing $1.18 billion.

In addition to global private banking offices in New York, Miami, San Francisco and Houston, RBC's U.S. operations include RBC Centura, a regional bank in the U.S. Southeast; RBC Dain Rauscher, a full-service securities firm; RBC Insurance, a national provider of insurance protection and asset accumulation solutions; RBC Capital Markets, with corporate and investment banking operations in New York, Minneapolis, San Francisco, Houston and other select U.S. locations; and RBC Builder Finance, a Houston-based provider of construction loans with national reach.

Royal Bank, also known as RBC Financial Group, is Canada's largest bank based on stock market valuation.

In Wednesday trading on the Toronto Stock Exchange, Royal's shares lost 29 cents to $49.10.

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© The Canadian Press, 2006