TORONTO (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)