Big Brazilian bank Itau named a Citizens suitor; rumors heat up

August 8th, 2012 at 11:15 am by under Nesi's Notes, On the Main Site

If you believe the financial press, Citizens Bank doesn’t lack for suitors.

With its parent company Royal Bank of Scotland still reeling from its 2008 near-death experience and the Libor scandal, rumors are swirling that RBS may soon sell off Providence-based Citizens to raise some much-needed cash. RBS is 82% owned by British taxpayers.

Canada’s TD Bank has already been cited as a potential buyer of Citizens. Over the weekend a less familiar name emerged: Itau Unibanco Holding, one of Brazil’s largest banks, which The Times of London reported Sunday is mulling an offer. The newspaper cited no sources but said RBS could get more than $15 billion for Citizens.

“RBS is known to have coveted a sale of Citizens for some time but has been unwilling to accept a knock-down price,” The Daily Telegraph’s Philip Aldrick reported Sunday. British authorities “are also understood to be keen for RBS to sell off the US operations to release funds to focus on UK lending.”

Itau tried to tamp down the speculation late Tuesday, saying in a statement it “isn’t negotiating the acquisition of Citizens” or any other American bank “as there is no proposal or related document in this sense,” but adding that the bank is “always considering options to expand its operations in the financial market.”

As for RBS, CEO Stephen Hester on Friday described Citizens as a “core” part of the bank and praising its performance in recent quarters. “Citizens is much more valuable to our shareholders today than it was three years ago, and I have every confidence that it will be more valuable again three years from now,” Hester said.

But as one banking analyst told The Scotsman, “Everybody knows that Stephen Hester believes there are no sacred cows. He has chosen his words carefully, never actually saying RBS will never sell Citizens even while asserting it remains a core business for now. It is quite possible he would wait a few more years to extract more value from a sale.”

And Citizens isn’t the only local bank The Times thinks is on Itau’s target list. The paper also suggested Sovereign Bancorp, now owned by Spain’s Banco Santander, could be purchased by the Brazilian firm. As for Citizens, The Times says JPMorgan Chase & Co. is another potential buyer along with TD Bank and Itau.

• Related: Report: RBS may have to sell Providence-based Citizens Bank (Aug. 6)

Tags: , , , , ,

2 Responses to “Big Brazilian bank Itau named a Citizens suitor; rumors heat up”

  1. Jeff says:

    If Citizens does sell, what happens to the people that do business with the bank. Such as savings and checking and credit lines.

    1. Ted Nesi says:

      Jeff, I’d assume all of that would stay the same at first. It’s possible eventually the bank’s policies would change in terms of what products it offers, etc., depending on what the new ownership wants.