The British government's rescue of The Royal Bank of Scotland last year has thrust Ellen Alemany, the head of its U.S. operations, into an unfamiliar role: turnaround specialist.
It's a challenge Alemany, the chief executive of the $121 billion-asset Citizens Financial Group in Providence, R.I. and RBS Americas has heartily welcomed. Indeed, when the British-based parent company nearly collapsed under the weight of over-expansion and bad investments, Alemany was the first division executive to present to RBS Group's CEO a strategy for restructuring business units and ensuring future profitability. Alemany then began shaking up the management team, unloading branches, exiting business lines and introducing innovative new products.
"Citizens received a strong vote of confidence from RBS this year," Alemany says. "That faith is enabling us to work every day toward becoming a leading bank in the markets where we choose to operate."
These are challenging times for Citizens. Aside from the problems at its parent company, now 70 percent-owned by the British government, the bank is struggling with its own credit-quality issues. As of June 30, 1.75 percent of its loans were past due, up from 0.70 percent a year earlier, chargeoffs had more than doubled from a year earlier, to 2.09 percent of loans, and the company had lost $263 million, compared to a profit of nearly $370 million in the first six months of 2008.
In order to return to profitability the bank has shuttered or sold branches throughout its footprint and turned to growing deposits. In October Citizens instituted an environmentally oriented incentive program that rewards new and existing customers with up to $10 per month (or $120 per year) for conducting transactions electronically. From its launch in October 2008 through June 30, Green$ense had doled out $3.5 million to more than 218,000 customers. More importantly, the initiative helped the bank increase core deposits by nearly 13 percent in nine months, to $67.4 billion.
Citizens also created the TruFit Student Loan program, a new private-label initiative for student loan originations and servicing aimed at covering the growing funding gap between federal student loan limits and the rapid increase in college costs. Under Alemany's direction, the TruFit program was developed in just 60 days, in time to make the July loan application deadline for students attending universities in the fall.
"A key part of our strategy is keeping the customer at the heart of every important decision we make, and rolling out carefully considered products that appeal to customers - and to help them when they need it most. TruFit is a great example," Alemany says.