Report: TD Bank looks again at buying RI-based Citizens Bank

October 13th, 2013 at 6:41 pm by under Nesi's Notes, On the Main Site

Citizens_ATMThere’s a new development this weekend in the ongoing soap opera that is Citizens Financial Group’s corporate future.

What to do with Providence-based Citizens has been an ongoing source of friction between executives at its part-nationalized parent company, Royal Bank of Scotland in the U.K., and the British government that owns 81% of RBS after a 2008 bailout.

When we last checked in on the Citizens saga in June, the British finance minister – Chancellor of the Exchequer George Osbourne – was publicly and loudly urging the next CEO of RBS to sell off the U.S. lender rather than just float a 25% stake in a public offering, currently planned for 2014 or 2015.

Now The Times of London, citing anonymous sources, is reporting that Citizens’ on-again/off-again suitor TD Bank of Canada has become increasingly interested in purchasing the local lender since the summer. The Times estimates Citizens is currently worth about £8 billion ($12.8 billion). RBS bought Citizens in 1988.


UK Treasury chief: Time for RBS to jettison RI’s Citizens Bank

June 20th, 2013 at 3:52 pm by under Nesi's Notes, On the Main Site

Citizens_ATMThe Citizens Financial Group saga has taken another dramatic turn.

Britain’s finance minister, Chancellor of the Exchequer George Osbourne, delivered his closely watched annual Mansion House Speech to bankers in London on Wednesday night, and he left no doubt that he and the rest of U.K. Prime Minister David Cameron’s cabinet want the Royal Bank of Scotland to sell off Providence-based Citizens altogether.

UK Financial Investments, the company created to manage taxpayers’ stake in RBS and other bailed-out banks, has “made it clear that the government has no strategic interest in RBS owning one of the largest regional banks in the U.S. – and the method of exit from Citizens must achieve maximum value for all shareholders,” Osbourne declared in the speech.

While it was hardly a secret that Osbourne wants RBS to get rid of Citizens, the chancellor’s decision to make the demand publicly will ratchet up the pressure on the bank’s board, which so far has only planned to float a 25% stake in an IPO next year.


Reports: Van Saun may replace Alemany as RBS Citizens CEO

April 2nd, 2013 at 5:09 pm by under Nesi's Notes, On the Main Site

Citizens_ATMEmployees at RBS Citizens Financial Group could have a new boss soon.

According to multiple reports published Tuesday, Royal Bank of Scotland is preparing to install its Chief Financial Officer Bruce Van Saun as the new CEO of Providence-based Citizens, where he would replace Ellen Alemany. The Financial Times reports Alemany “is expected to retire.”

Van Saun is a native of Pennsylvania who joined RBS in 2009 after a lengthy tenure at what is now Bank of New York Mellon. He would take over as RBS prepares to sell a 25% ownership stake in Citizens through an initial public offering, yielding to pressure from U.K. regulators.


Watch Executive Suite on the cloudy future of Citizens Bank

March 11th, 2013 at 5:00 am by under Nesi's Notes, On the Main Site

Citizens Bank’s future cloudy as spin-off announcement looms

February 27th, 2013 at 8:04 pm by under Nesi's Notes, On the Main Site

Thursday is set to be a big day in the 185-year history of RBS Citizens Financial Group and Citizens Bank, Rhode Island’s No. 2 for-profit employer and one of Providence’s few big corporations.

The Royal Bank of Scotland, which bought Citizens in 1988, is expected to unveil plans to sell 15% to 25% of its stake in the local bank through an initial public offering (IPO). It would be yet another move by CEO Stephen Hester to shore up RBS, which is majority owned by British taxpayers after the U.K. government spent $68.9 billion bailing it out in 2008-09.

What does all this mean for Citizens and its presence in Providence? In the short term, probably not much. Over the long term, it likely depends on whether Citizens gets eaten by a bigger bank – and how much of the bank’s operations are still here in the first place.

The reasons RBS is planning the IPO – quite possibly despite CEO Hester’s reservations – are clear enough.


WSJ: Citizens IPO next week will help determine bank’s value

February 23rd, 2013 at 11:03 am by under Nesi's Notes, On the Main Site

Other news outlets are adding a bit more context to last night’s Daily Telegraph scoop about RBS planning to float a minority stake in Citizens Financial Group as a first step toward selling the Providence-based bank.


Report: RBS to start selling stake in RI’s Citizens next week

February 22nd, 2013 at 7:14 pm by under Nesi's Notes, On the Main Site

Breaking news tonight out of London. Philip Aldrick and Helia Ebrahimi report for The Daily Telegraph:

Royal Bank of Scotland will next week reveal plans to float its US retail bank, Citizens, in a deal expected to raise more than £8bn for the state-backed lender. …

The potential initial public offering (IPO) would be one of the largest ever spin-outs from a UK bank ….

However, no bankers have been appointed and the process is likely to take around two years to complete.

On Thursday, RBS is expected to outline plans to initially sell a small stake in Citizens, of about 25%, and to keep open its options for future disposals. Bank insiders also hope that the prospect of a float could draw out prospective bidders willing to pay a full price for the business, although RBS will not run a formal “dual track” process. Canada’s TD Bank is one likely suitor.

Citizens’ future has been in question ever since U.K.-based RBS, which bought Citizens in 1988, was rescued by the British government in the fall of 2008 at the height of the financial crisis. RBS remains 82% owned by British taxpayers. The speculation has picked up steam since last summer’s New York Post report that TD Bank had discussed Citizens with RBS and subsequent stories about British regulators pressuring RBS to sell.

Citizens is the second-largest bank in Rhode Island by deposits, with a 21% market share and $9.6 billion in local assets, according to FDIC data as of June 30, 2012. TD Bank – which expanded to Rhode Island in 2010 – had a 0.29% market share and $130 million in assets at the same time, nearly double from a year earlier. Buying Citizens would be a quick way for TD to expand its presence in Northeastern retail banking.

For Rhode Island, one of the biggest questions is how Citizens’ local presence would be impacted if the bank was merged with another institution such as TD: Citizens was Rhode Island’s second-biggest for-profit employer as of 2011, according to the state, behind only CVS Caremark.

• Related: Full coverage of a possible Citizens Financial Group sale (Nov. 28 to Aug. 6)

Parent of Providence’s Citizens Bank has a (slightly) new name

December 10th, 2012 at 10:01 am by under Nesi's Notes, On the Main Site

Citizens Bank isn’t changing its name, but its holding company is – a little.

The new name is RBS Citizens Financial Group, which tacks on the initials of Citizens’ British parent company, Royal Bank of Scotland Group. The change was made earlier this year “to create better alignment with our brands,” Citizen spokesman Jim Hughes told WPRI.com.

“Our commercial banking division operates under the RBS Citizens brand and we also do business in auto lending as RBS Citizens,” Hughes said. “Citizens Bank and Charter One remain our brands for consumer and small-business banking.”

RBS bought Citizens in 1988 and is now under pressure from British regulators to sell the profitable American division as it tries to recover from the financial crisis.

• Related: Full coverage of a possible Citizens Financial Group sale (Nov. 28 to Aug. 6)

Columnist: TD Bank investors may not like Citizens acquisiton

November 28th, 2012 at 10:06 am by under Nesi's Notes, On the Main Site

Citizens-is-for-sale rumors have quieted down since Royal Bank of Scotland CEO Stephen Hester played down the possibility on Nov. 2, but business columnist David Milstead still offered this in The (Toronto) Globe and Mail:

Toronto-Dominion Bank, which has already bulked up its U.S. business, is said to be a logical buyer for RBS Citizens Bank, a massive franchise that would add considerable heft to its south-of-the-border foray.

Whether this will prove true — it is, after all, at the rumour and speculation stage — it prompts a couple of questions: One, is TD already too American for investors who like their Canadian banks to be Canadian? And, two, is eschewing TD on that basis actually a good idea for Canadian investors?

The answer to the first question is probably yes. The answer to the second is a little more complicated. …

If TD can pick up Citizens Bank at a bargain price, and ride the rebound of the U.S. banking sector, shareholders should see quite a bit of benefit. But Canadians who prefer the safer, slower Canadian banks would be well-advised to consider whether TD fits in with their portfolios anymore, Citizens Bank deal or no.

• Related: RBS CEO downplays Citizens sale likelihood, won’t rule it out (Nov. 2)

Analyst: RBS will sell Citizens Bank ‘in the next year or two’

November 20th, 2012 at 10:16 am by under Nesi's Notes, On the Main Site

It’s only a matter of time before the Royal Bank of Scotland sells Citizens Financial Group, at least in the view of Sanford Bernstein senior analyst Chira Barua.

“I think it will happen in the next year or two. It makes sense for business reasons and timing,” Barua told Reuters in a new article that provides the clearest, most detailed assessment so far on when and why RBS is likely to sell off the Providence-based lender.

Citing a Credit Suisse analysis, Reuters reporters Steve Slater and Matt Scuffham say a potential deal for Citizens could net RBS anywhere from $8.8 billion to $13.6 billion.

And while Slater and Schffham echo the conventional wisdom that TD Bank is the most likely buyer, they offer a long list of other potential suitors: PNC, U.S. Bancorp, Mitsubishi UFJ and Itau Unibano. Another option would be Citizens getting split up between TD and another regional lender such as M&T Bank, Fifth-Third, Huntington or KeyCorp.

Read the whole article here.

• Related: Full coverage of a possible Citizens Financial Group sale (Nov. 5 to Aug. 6)

(photo: Wikipedia)

Analyst: TD Bank would be No. 5 US bank if it buys Citizens

November 5th, 2012 at 5:47 pm by under Nesi's Notes, On the Main Site

The view from Canada on a TD Bank purchase of Citizens Bank. Jonathan Ratner writes for Financial Post:

“In fact, combining the branch networks and deposit shares confirms the reasonably higher degree of overlay,” [Robert Sedran, an analyst at CIBC World Markets] told clients. “Even after all the transactions it has completed in the United States, we would still view this as transformational, as it would vault the bank into a legitimate top five position in terms of deposit market share in the United States, despite not having a national footprint.” …

While the integration risks would be significant and could derail the momentum TD’s platform has already been showing, the biggest hurdle for this acquisition would likely be the price tag. Media reports peg the value of Citizens Bank at between US$12-billion and US$16-billion.

“The financing alone could be a deal breaker, absent some level of creativity,” Mr. Sedran said, suggesting a separately-traded U.S. subsidiary could be spun off to allow the bank to more effectively tap the U.S. market for equity.

• Related: RBS CEO downplays Citizens sale likelihoood, won’t rule it out (Nov. 2)

RBS CEO downplays Citizens sale likelihood, won’t rule it out

November 2nd, 2012 at 12:28 pm by under Nesi's Notes, On the Main Site

Will Royal Bank of Scotland sell Citizens Financial Group?


RBS CEO Stephen Hester was circumspect in his comments about Providence-based Citizens on Friday after RBS announced it lost $2.2 billion during the three months ended Sept. 30. It was the first time Hester has spoken out since news surfaced that British regulators are pressing him to consider selling Citizens.

“I’ve never ruled anything out and I’m not going to start ruling it out now,” Hester said, acknowledging there “may be a day” when selling Citizens would benefit RBS shareholders, according to various published reports.

But Hester suggested now is not the time, repeating RBS executives’ mantra that Citizens is a “core” part of the bank’s operations, and that RBS has a “cogent and coherent strategy” which is partly “to not have all its eggs in one geographic basket.”

“It’s unlikely that today is the best time to sell financial services assets,” Hester said.

• Related: PNC or BMO could buy Citizens (Oct. 25) | Official: RBS should consider sale (Oct. 23)

PNC or BMO could buy Citizens, top banking analyst suggests

October 25th, 2012 at 1:05 pm by under Nesi's Notes, On the Main Site

If Royal Bank of Scotland is forced to sell off Providence-based Citizens Financial Group, the majority of experts think the most likely buyer would be Canada’s TD Bank Group. But not everyone agrees with the conventional wisdom.

Richard Bove, the influential bank analyst at Rochdale Securities, thinks the top candidate is Pittsburgh-based PNC Financial Services Group, Patty Tascarella reports for the Pittsburgh Business Times:

“I think they’re No. 1, top of the list without any question,” Bove said. “If you look at mergers, the ones that work the best are in-market. PNC’s move into the southeast is high-risk, they’re in a market they aren’t familiar with, they’re pleased with what’s happening there, but if they can buy a bank that’s sitting on top of the same markets they’re in, the economies of scale for a merger of that nature are phenomenal.” …

Gerard Cassidy, a financial analyst at RBC Capital Markets, told the Philadelphia Business Journal that he believes PNC is too consumed with its expanded southeast footprint to contemplate another purchase at this time.

Bove suggested another Canadian financial institution as a potential Citizens acquirer — Montreal-based BMO Financial Group (NYSE: BMO) — which has 1,600 branches, a deposit base of $180 billion and does business in the United States as Chicago-based BMO Harris Group. …

Fifth Third Bancorp, based in Cincinnati, could also be a possibility, Bove added.

Part-nationalized RBS is under growing pressure in Britain to sell Citizens after officials at the Financial Services Authority and taxpayer-backed UK Financial Investments made the suggestion to RBS CEO Stephen Hester. But his management team is strongly resisting the idea.


RBS should take hard look at Citizens, UK official tells MPs

October 23rd, 2012 at 1:53 pm by under Nesi's Notes, On the Main Site

The official overseeing British taxpayers’ stake in Citizens Financial Group parent Royal Bank of Scotland told parliamentarians on Tuesday he’s pushed RBS executives to shrink the bank and take a closer look at its ownership of Citizens.

“I would confirm that among the strategic issues we have discussed with management are the U.S. operations and the investment bank,” U.K. Financial Investments (UKFI) CEO Jim O’Neill told the Parliamentary Commission on Banking Standards, according to a Reuters report. The British government created UKFI in 2008 to manage taxpayers’ bank stakes.

O’Neill’s comments will add further fuel to the newest round of speculation about whether RBS could soon sell off Providence-based Citizens, which it bought in 1988. Another British official, Andrew Bailey of the Financial Services Authority, has also reportedly urged RBS to sell Citizens.

Analysts estimate RBS could get more than $14 billion by selling Citizens, according to Reuters, but executives at the beleaguered bank have resisted the idea.


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.”


How the Fed propped up Citizens, Sovereign, Webster

December 21st, 2010 at 7:00 am by under General Talk

I’m surprised that no other news outlets have picked up on the story my pal Bill Hamilton wrote for PBN last week revealing how Providence-based Citizens Bank tapped one of the Federal Reserve’s special lending programs 29 times – to the tune of $117 billion – during the credit crunch. Citizens has since paid the money back, but the central bank wasn’t forced to disclose the information until now.

Nor was Citizens alone; Bank of America, Sovereign Bank, Webster Bank and MetLife Bank all used the Fed’s programs too. Here’s some of what Hamilton reported:

The borrowing was not a sign of financial weakness but a chance to take advantage of a less-costly source of liquidity at a time when the credit squeeze was on, a Citizens Financial Group spokesman insisted last week.

“It was an alternative, cheaper source of funding … that we in turn would use to lend,” spokesman Michael Jones told Providence Business News. …

The largest single loan made to RBS through [the Fed's Term Auction Facility program] was for $10 billion on Oct. 23, 2008, at a 1.11 percent interest rate. It was paid back by Nov. 20, 2008.

The largest amount the bank owed to the Fed at any one time was $18.3 billion, at the height of the financial crisis in March 2009, Jones said.

While foreign-owned banks such as Sovereign and Citizens Financial were barred from participating in the Troubled Asset Relief Program, Citizens’ parent, the Royal Bank of Scotland plc, took advantage of the Fed’s loan facilities, according to the central bank’s new disclosures.

That last point is particularly interesting, because it gets at one of the big debates sparked by the Fed’s new disclosures – namely, whether it’s appropriate for the U.S. central bank to be loaning so much money to financial institutions headquartered abroad. (RBS has owned Citizens since 1988.) As Hamilton notes, Congress explicitly barred them from taken part in the infamous TARP program, but the Fed didn’t put similar restrictions in place.

Meanwhile, RBS – which is still 83% owned by the British government after its 2008 bailout – is now hoping to pay cash bonuses to its investment bankers again for the first time since the crisis hit, Bloomberg reports.