Royal Bank of Canada said it would buy City National, a U.S. lender serving high net worth clients, in a $5.4 billion deal to expand in the United States.
RBC, Canada's largest bank by market value, offered $47.25 in cash and 0.7489 in stock for each City National share.
The total offer of $93.80 per share, based on RBC's closing price of $62.16 on the New York Stock Exchange on Wednesday, represents a premium of nearly 26 percent to City National's last closing price.
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There have been few large banking deals in the United States since the financial crisis as regulators have stepped up scrutiny of capital levels of acquiring banks.
However, there has been a wave of consolidation among smaller U.S. banks, which have struggled to increase profits due to historically low interest rates.
RBC plans to combine its U.S. wealth management unit with City National after the deal closes. The Canadian lender has 8,000 employees in the United States, including more than 3,000 in New York.
RBC said the transaction is expected to add to its earnings in the second year after the closure of the deal, which is likely in the fourth quarter of this year.
Los Angeles-based City National serves clients across several large U.S. metropolitan areas, including New York, Los Angeles, the San Francisco Bay Area and Orange County.