Royal Bank of Scotland Unit to Pay $144 Million for Boston's Neworld

Article excerpt

NEW YORK - Continuing the consolidation of New England banks, Citizens Financial Group said on Monday that it will pay $144 million in cash to acquire Boston-based Neworld Bancorp.

Rhode Island-based Citizens, which is owned by Royal Bank of Scotland PLC, will pay 1.6 times book value for Neworld, a $1.1 billion-asset thrift company with 14 branches in Boston and eight on Cape Cod.

The deal marks the third foray into Massachusetts by Citizens in the last 13 months and is the most recent as New England banks have begun to aggressively scout for in-market acquisitions.

Late Monday afternoon, shares of Neworld were trading at $33.25, up $4.50. Because of its foreign ownership, Citizens is not publicly traded here.

Deal Gets Thumbs-Up

Analysts applaud the transaction, which gives Citizens the third-largest retail deposit share in Boston. Citizens gained a foothold in that city this month when it completed its acquisition of the former Boston Five Cents Savings Bank, a $1.8 billion-asset savings bank with 25 branches in and around Boston.

"This surely identifies Citizens as a major player in the Boston market," said Jeffrey L. Cohn, an analyst at H.C. Wainwright & Co. in Boston. "We will be hearing more from them in the months and years to come."

Gerard Cassidy, an analyst at Hancock Institutional Equity Services in Portland, Maine, estimated that Citizens will be able to shave $11 million a year off Neworld's costs by combining it with the Boston Five franchise. …