CIT Group laid out plans to boost profitability and cut costs as Ellen R. Alemany takes over as chief executive officer of the commercial lender from John Thain, who's stepping down at the end of the month.
CIT will reduce annual operating costs by $125 million over the next two years as it targets a return on tangible common equity of 10 percent, the New York-based bank said Wednesday in a statement. The firm also is seeking to either sell or spin off its $10 billion aircraft leasing business, which manages a fleet of more than 350 commercial aircraft, by the end of this year.
"We look forward to executing on our strategy of creating a leading, national middle-market bank and believe our plan maximizes value for shareholders," Alemany, 60, said during a conference call with analysts.
Alemany is taking the reins as the company's purchase of OneWest Bank lifts assets above $50 billion, a threshold regulators use for designating systemically important financial institutions that require additional oversight. With the divestiture of the Commercial Air unit, CIT's assets will remain in the mid-$50 billion range and the firm may consider additional sales to drop below the level of regulatory scrutiny, she said on the call.
"As we continue to evaluate the business and execute our strategy, it's definitely one of the factors we're going to consider," Alemany said.
CIT's shares slid 13 percent this year through Tuesday, compared with the 4.2 percent decline of the Russell 1000 Financial Services Index.
Thain, 60, who rebuilt CIT after the financial crisis, said in October that he planned to depart at the end of this month. He said his job at the lender was "kind of done" and he hoped to retire to spend more time with his granddaughter.
