TORONTO, April 3 (Reuters) - Royal Bank of Canada ( RY )

expects its struggling unit in the U.S. to be "a net

contributor" to Canada's biggest lender and is bullish about the

opportunities south of the border, CEO Dave McKay told Reuters

on Wednesday.

City National Bank, which RBC acquired in 2015 under McKay's

watch, required capital injection and saw shake-up of its top

executives last year as the regional banking crisis in the

United States roiled smaller financial institutions.

"This is, for us, a good pause to reset the foundation for

the next leg of growth and we're very positive that City

National will be a net contributor to the bank going forward,"

McKay said in an interview after wrapping up the purchase of

HSBC Canada over the weekend.

McKay said City National's troubles came from rapid growth,

tripling the size of the bank at the cost of eroding profits.

The bank is now focused on remediating operating infrastructure

and regulatory deficiency while also improving profitability

back to the normal run rates.

"We're very positive that City National will be a net

contributor to the bank going forward... the U.S. story is just

as exciting."

The City National distraction came as RBC was trying to

integrate the C$13.5 billion ($10 billion) purchase of HSBC's

Canada unit. The deal announced in November 2022 tightens RBC's

grip on the domestic banking market, adding C$120 billion to its

nearly C$2 trillion assets.

The banking veteran, who completes ten years at the helm

this year, said the job situation in Canada was strong and

mortgage risk was manageable.

"I got a lot of work to do," he said when asked about the

bank's succession plan.

The board gave McKay a pay boost for his role in the

acquisition and the head of its personal and commercial banking

segment Neil McLaughlin a one-time special cash award of up to

C$1.25 million.

"TECHNOLOGY ACCOMPLISHMENT"

McKay said a team of 3,000 employees had worked on the

transition for over 18 months, spending about C$1.3 billion to

onboard HSBC's Canadian clients, who had access to renamed

accounts and access to the app.

"It was an unprecedented technology accomplishment," he

said.

As a part of the approval conditions, the federal government

asked RBC to maintain and create new Canadian jobs, and assure

job guarantee for at least six months after closing the deal.

McKay said the bank had largely addressed over hiring during

the pandemic through layoffs in preparation for the deal close.

"There will be some displacement of roles but we're doing

our best to take those employees that are impacted over the next

six months and find them other roles," he said.

McKay addressed consumer concerns about less competition on

mortgage rates saying it was a "myth" and perception because of

advertising.

HSBC, typically known for advertising Canada's lowest and

most transparent uninsured mortgage rates, didn't discount off

that rate in practice, he said.

($1 = 1.3529 Canadian dollars)