Citizens Financial Group Inc. became the only nationalized banking company in the United States last month after the British government took over its troubled parent, Royal Bank of Scotland Group PLC.
Ellen Alemany, Citizens' chief executive and chairwoman, said she has barely noticed the difference herself.
"It hasn't changed anything at all — it hasn't changed anything in terms of how we operate," Alemany said in an interview Tuesday.
Alemany, who became the Providence, R.I., unit's chairwoman last week, said she still calls the day-to-day shots in the United States. Royal Bank's chief executive, Stephen Hester, also made that clear this month. He has given Citizens a mandate to withdraw from markets where it is a weak player, but he said the specifics of cutting back are up to Alemany and her team.
Suzanne Moot, a banking consultant with M&M Associates in Milton, Mass., said the government takeover of Royal Bank should not make it harder for Citizens to drum up and retain deposits.
"It certainly won't matter to the customers, to the regular everyday customers of Citizens Bank," Moot said. "As long as they are able to execute effectively, I doubt that the ownership issue will have much of a material impact."
Alemany said Hester put to rest a bigger issue plaguing her company last month by saying Royal Bank has no intention of selling Citizens. There had been widespread speculation the parent would consider doing so as it tries to recover from last year's $34 billion loss, the largest in British history. There was also chatter that the British government would force a sale after raising its stake in Royal Bank to about 95% from 70% last month.
Clearing up Citizens' fate removed a burden, Alemany said.
"There has been tremendous speculation in the market: 'Gee, is Citizens for sale?' " she said. "There was so much uncertainty. We think it was important that we get the message out to the external world."
Alemany dispelled another market rumor herself. She said the $160 billion-asset Citizens has no plans to offload its troubled Charter One Financial Inc. The U.K. press reported in February that Royal Bank was considering selling Charter One.
"We have no plan to sell Charter," Alemany said. "The Midwest is a very important source of deposits for us. I think that is important to say."
Gerard Cassidy, an analyst at Royal Bank of Canada's RBC Capital Markets Corp, said Citizens might have had trouble selling Charter One even if it wanted to, as most bankers are skittish about making deals without federal assistance right now.
Charter One, which Citizens bought for $10 billion in 2004, has been a drag on its performance. A $1.5 billion write-off related to Charter One drove Citizens to a $929 million loss last year. The loss surprised industry watchers, because Citizens has a reputation as a conservative lender and because, as a subsidiary of a foreign company, it infrequently reports earnings.
Alemany said it made $485 million, excluding the write-off. She would not say if Citizens would be profitable this year. It is "in a little bit of a better position" than some rivals, since the housing market has not been as dismal in the Northeast as it has been in some other regions.
Citizens also steers clear of risky lending and extends consumer loans only to customers with credit scores of at least 740, she said.
Still, like many other financial institutions, Citizens was hammered by its loan portfolio last year. It more than doubled its loan provisions, to $1.93 billion, to cope with souring home equity and auto loans, among other things.
Alemany said it planned to turn things around by "going back to basics." This means focusing on deposit growth, customer service, and traditional lending.
Her unit is also retrenching in the Northeast. Last year it exited the Memphis commercial finance business and agreed to sell 65 Charter One branches in Indiana to Old National Bancorp. In December, Citizens announced that it would cut 900 of its 24,000 jobs.
Alemany would not rule out further layoffs or branch closings as Citizens goes about "shrinking back" to its "core retail franchise." It has more than 1,600 branches.
Bob Maneri, a managing director with KeyCorp's Victory Capital Management in Cleveland, said Citizens has good prospects in markets where it is a top player, such as Massachusetts, Rhode Island and Pennsylvania.
"If you look at the footprint, this wasn't a boom-bust area," Maneri said. "They're not boom and growth markets, but they're steady."
