Citizens Financial Group of Providence, R.I., has been ordered to change the name of its Citizens Bank in one western Pennsylvania county, because consumers are confusing it with a bank with a similar name.
The $126 billion-asset unit of Royal Bank of Scotland Group PLC has promised to appeal a federal court ruling handed down last week. However, its recently completed acquisition of Charter One Financial Inc. could solve the naming problem. Citizens plans to retain the Charter One name in many midwestern markets - probably avoiding similar run-ins with other banks named Citizens.
It is a popular bank name. According to the Federal Deposit Insurance Corp., the nation has about 330 banks that are named Citizens or contain the word in their names.
In 2001 the Providence bank said it was buying Mellon Financial Corp.'s retail business, which included 345 branches. Since then it has been in a legal battle in Butler County, Pa., with the $445 million-asset Citizens National Bank of Evans City.
Citizens National, which filed suit to block the other Citizens from using that name, argued that the similar names and logos would cause confusion in the marketplace.
A year ago the Providence company appeared to have prevailed when a district judge - overruling a jury's verdict - said it could keep its name in Butler County and ordered the smaller Citizens to put the word "National" back in its logo and advertising. (Shortly before filing suit it had dropped "National" from its name; the judge said it had purposely caused confusion with the change.)
The smaller Citizens appealed, and last week a three-judge panel of the U.S. Court of Appeals for the Third Circuit ruled that it has the right to the Citizens name in Butler County, where it operates 13 of its 17 branches. The panel said Citizens Financial would have to change the name of its eight branches there.
Margaret Irvine Weir, Citizens National's president, said, "We are feeling very vindicated and are happy that they saw our position was quite correct."
Ms. Weir maintains that the confusion continued even after the bank added "National" to its name and all its materials last year. That "did not seem to clean it up, since people did not understand" that the change was a charter issue, not a regional one, she said. "So they assumed since we had 'National' we were the much larger bank."
Barbara Cottam, a spokeswoman for Citizens Financial, said that it disagrees with the ruling and will appeal it to the full appeals court. She would not say if her company would change its name or ask for a delay during the appeal process. She also would not discuss possible new names for the eight affected branches.
"Charter One" would seem a logical option. Citizens Financial bought the Cleveland company Aug. 31 and plans to keep the Charter One name intact in the Midwest. Charter One has more than 150 branches in Ohio and more than 200 in New York, but only three in Pennsylvania.
The Charter One name will be retained because Citizens "felt it was the most efficient way to begin operations in the Midwest," Ms. Cottam said. Charter One has a national charter, while Citizens' eight subsidiaries operate under state banking and thrift charters.
She would not say if the decision to retain the Charter One name was prompted by the ubiquity of "Citizens" banks. However, by keeping what is obviously a less-common name, her company might avoid legal battles in its new markets.
In Michigan, for example, where Charter One has 119 branches, one of its top competitors is the $7.7 billion-asset Citizens Banking Corp., which is headquartered in Flint. There are also 40 banks with the word "Citizens" in their name in Illinois, Indiana, and Ohio - three states Citizens Financial entered with the Charter One acquisition.
