Citizens Bank Sale Likely, Experts Say

By Olson, Thomas | Tribune-Review/Pittsburgh Tribune-Review, October 22, 2012 | Go to article overview

Citizens Bank Sale Likely, Experts Say


Olson, Thomas, Tribune-Review/Pittsburgh Tribune-Review


Citizens Bank likely will be sold because U.K. regulators are pressuring its Scottish parent to raise much-needed capital, industry experts said on Monday.

Citzens -- Western Pennsylvania's second-largest bank with 132 branches -- is part of RBS Citizens Financial Group, based in Providence, R.I., which is the American banking franchise of the Royal Bank of Scotland.

The U.K. government owns 81 percent of Royal Bank of Scotland from a nearly $73 billion bailout in 2008 and can call the shots, banking experts said.

Bank of America, JPMorgan Chase or Wells Fargo are possible buyers, they said.

"If the U.K. government thinks it's good for U.K. taxpayers for RBS to raise capital by selling RBS Citizens, and they don't have an alternative, RBS would have to follow through with it," said Nancy Atkinson, a senior bank analyst at Aite Group in Boston.

Given its financial trouble, Royal Bank of Scotland is obliged to explore ways to raise money, said Martin McGuinn, former CEO of Mellon Financial Corp., who sold the bank's three-state banking franchise to Citizens Financial in 2001. Mellon later merged with Bank of New York to form Bank of New York Mellon Corp.

"Their franchise in the U.S. is a natural because it's valuable," McGuinn said. "The irony is that because Citizens is a valuable franchise, they'd like to keep it from a strategic point of view for the revenue it produces. But that value can deliver the capital they sorely need."

Asked about the prospect of a sale, Royal Bank of Scotland spokesman Michael Strachan in Edinburgh said in an email that Chief Executive Stephen Hester in August called the U.S. bank "part of our core plans," and that it would be "more valuable" for shareholders "three years from now."

Strachan would not say whether Hester has changed his stance or whether Royal Bank of Scotland would rule out a sale.

Citizens Bank holds $6.88 billion in deposits in the seven- county Pittsburgh region, a 7.1 percent share of the market, according to the Federal Deposit Insurance Corp. The bank's U.S. parent has more than 1,400 branches and ranks as the nation's 13th- largest bank by deposits, with $93 billion.

Industry experts said possible buyers of RBS Citizens could include the nation's biggest banks, most of which do not operate branches in Western Pennsylvania. …

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