-
Royal Bank of Scotland's U.S. subsidiary is adding staff in lending and wealth management under new CEO Bruce Van Saun as it looks looks to boost its loan portfolio and improve its revenues ahead of its widely anticipated public stock offering.
October 4 -
Bank buyers should run potential deals by regulators early to avoid "landmines" and speed applications, officials from the Office of the Comptroller of the Currency say. Proper due diligence, succession planning and risk management are among the things they look for.
October 2 -
FirstMerit, M&T Bank and New York Community Bancorp are buyers in different stages of the acquisition process, and their executives together provided an insightful look into the full M&A experience this week.
September 10 -
Rival bankers who operate in Chicago have been giving their takes some sarcastic, others serious, yet others cautious about the competitive effect of MB Financial's deal to buy Taylor Capital.
July 26 -
Too-big-too-fail worries in the U.S. make the full sale of Royal Bank of Scotland's Citizens Financial Group in Providence, R.I., highly unlikely, despite speculation about potential buyers.
February 25
A gem in a normal market might be a tough sell in the current one.
Citizens Financial Group, the U.S. operation of Royal Bank of Scotland, has hired Bank of America's (BAC) Merrill Lynch unit to help find a buyer for its 106 branches in Chicago, Crain's Chicago Business reported on Friday, citing people familiar with the matter.
Operated as Charter One, the branches hold roughly $6 billion in deposits or 1.83% of the deposits in the Chicago metropolitan area, according to data from the Federal Deposit Insurance Corp.
Bank M&A is always a hot topic in the Second City, given the fierce competition there. More than 230 banks duke it out in Chicago, so the opportunity to pick up one of its larger deposit holders should garner no shortage of interest from ambitious super-community banks in the market and larger regional and national players.
However, turning that interest into a deal will likely prove challenging, observers say. Based on several interviews with analysts, there is no clear front-runner in terms of a natural fit or ability to make a deal happen. Additionally, in a period of weak loan growth, the assets or lending platforms RBS chooses to include would be crucial to the deal's appeal.
"The first issue is the regulatory aspect of getting it approved, but the second issue would be how the deal is structured what's on the left-hand side of the deal?" says Jeff K. Davis, a managing director at Mercer Capital. "What do you do with all of that cash in this environment?"
The predicament RBS faces with its U.S. operations is familiar. Questions about the Citizens unit arose in 2008 when it was nationalized by the United Kingdom. The potential sale of Citizens or
Such moves are often attempts to smoke out a buyer for the entire organization, but at $137 billion in assets, most observers say its size makes a full sale
The Chicago sliver brought the same reactions, too. U.S. Bancorp (USB) and Fifth Third Bancorp (FITB) could potentially be interested, several analysts say. For U.S. Bancorp, the deal would double its market share. For Fifth Third, it would increase it by 50%.
Both companies, as well as RBS, declined to comment on market speculation, but analysts say they are unsure if regulators would allow the banks to acquire the branches.
"We don't know if big banks can do any kind of deals right now," says Terry McEvoy, an analyst at Oppenheimer.
Bruce Van Saun, the new chief executive of Citizens, has repeatedly said that current market conditions make a sale of the full unit unattractive. When asked about the Chicago branches in an
"One thing I really like about Citizens is our footprint. Every bank from time to time looks at different opportunities to fine-tune that footprint, but I think that's what we'd really be talking about, fine-tuning."
In the shadows of MB Financial's (MBFI)
FirstMerit (FMER) would be a natural fit. The Akron, Ohio, company expanded into Chicago a few years ago. But this year it doubled its size by acquiring Citizens Republic Bancorp in Flint, Mich., and observers say its
PrivateBancorp (PVTB) is facing some potential funding pressure because of its robust loan growth, but the Charter One branches are likely not the best fit, says Chris McGratty, an analyst at Keefe, Bruyette & Woods. Charter One is retail focused, whereas Private works with businesses and the wealthy. Also, 105 branches are probably too many. If Citizens is willing to carve up the offering, Private could likely be a contender; it declined to comment.
"People are starting to ask about their long-term funding. It is a key thing for them," McGratty says. "But we are talking a couple of billion, not six."
While getting a deal inked might prove difficult, the chance to pick up a large deposit-holder in Chicago will likely whet a lot of appetites.
"How often do you have an opportunity to pick up $5 billion of deposits in Chicago?" McEvoy says. "Everybody is at least going to run the numbers to see if it makes sense."
