June 13, 2018 / 2:31 PM / 2 months ago

UPDATE 2-Royal Bank of Canada boss troubled by U.S. trade talks

* RBC CEO McKay says still hopeful of a positive outcome

* McKay said he thought deal would have been reached by now

* RBC to cut 20 percent of branch square footage (Recasts, adds CEO comments on NAFTA negotiations)

By Matt Scuffham

TORONTO, June 13 (Reuters) - Royal Bank of Canada's chief executive said he was troubled by the dispute between Canada and the United States over trade tariffs and frustrated by the slow progress of negotiations to update the North America Free Trade Agreement.

U.S. President Donald Trump has threatened to double down on import tariffs by hitting the sensitive auto industry, making it virtually impossible to renegotiate the 1994 NAFTA pact between the United States, Canada and Mexico.

"I’m troubled by how events have spiralled to where they are today," CEO Dave McKay told reporters after Canada's biggest lender, which also has a substantial business in the United States, made a strategy presentation to investors on Wednesday.

"I am incredibly frustrated that we are letting things get away from us," McKay added. "I thought we would have had it resolved by now and moved on to other things."

McKay said that the Canadian government was right to believe that "no deal is better than a bad deal" but said he was still hopeful that a positive outcome will be achieved.

RBC told investors it plans to reduce the total square footage of its branch network by at least 20 percent over the next five years as clients do more banking online.

Banks around the world are cutting branches and staff and investing in technology as more customers choose to bank online or use mobile banking apps instead of visiting a branch.

RBC's Canadian retail head Neil McLaughlin said since 2015 RBC has cut its branch count by 4 percent, or 40 branches, and total branch square footage by 6 percent.

He said that will accelerate to a 20 percent reduction in square footage over the next five years with the bank having the flexibility to make cuts faster if customers continue to shun branches.

"As clients' behavior changes, we have to respond," he said during a presentation to investors. "If client behavior does change more rapidly than we've seen over the last couple of years we do have the flexibility to move more quickly."

McLaughlin said between 400 and 500 jobs could be cut as a result of the changes over the next few years. (Reporting by Matt Scuffham Editing by Jeffrey Benkoe and Cynthia Osterman)

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