In its first interstate expansion since the late 1980s. Citicorp is planning to open three retail branches in Connecticut later this year, marking its first foray into the Nutmeg State.

Citicorp has received approval from the Office of Thrift Supervision to open three full-service branches of Citibank FSB in affluent Fairfield County, a spokeswoman confirmed.

Citibank FSB is a California-chartered thrift subsidiary through which Citicorp conducts its consumer banking outside of New York.

|Delayed Our Presence'

"Given the condition of the company, we've delayed our presence" in Connecticut. the spokeswoman said. "But it's time to move on."

The nation's biggest bank company delayed all expansion plans in 1991 because of mounting real estate problems that reduced its earnings, stock price, and capital to extremely low levels.

It continues to operate under a memorandum of understanding with federal regulators that requires it to consult with them on operational issues, including significant acquisitions or other forms of expansion.

But Citicorp is on the rebound, and apparently ready to make more investments in its powerful retail franchise.

In Connecticut, the banking company is seeking a toehold in southern Fairfield County -- an important extension of the hotly competitive New York City metropolitan market.

Rivals Already There

Two of Citicorp's bigger rivals have already staked out a presence in the area, one of the nation's wealthiest. It also borders New York's Westchester County, another affluent suburban region.

Chase Manhattan Corp. entered Fairfield County two years ago when it bought two failed Bridgeport banks. New Jersey's First Fidelity Bancorp. edged in this year with its purchase of Northeast Bancorp., a troubled company with 68 branches in the county.

While Citicorp's presence will be tiny, observers said its impact on Connecticut's banking scene is likely to be significant.

In California, Florida, and other states in which Citicorp has small branch networks, the company has aggressively marshaled technology and specialized marketing programs to make strong inroads with affluent individuals.

|Will Notch Up the Level'

That strategy could play well in Fairfield, where the average annual household income is $65,853.

"This will notch up the level of sophistication of competition in Fairfield County," said Les Dinkin, president of NBW Consulting Group in Westport. "The banks will have an aggressive new competitor on the block to contend with."

Citicorp's Connecticut branches will be located near the Westchester border in Cos Cob, Stamford, and Greenwich. But now that it has a toehold, Citicorp is likely to move quickly to establish more outposts in a state that is undergoing rapid consolidation of its banks.

Smaller Institutions Vulnerable

With much of Connecticut mired in a recession, many smaller institutions are vulnerable to, or eagerly courting, takeover. Earlier this month, First Fidelity agreed to buy Greenwich Financial, a thrift-holding company with seven offices near Citicorp's planned branches.

The Citicorp spokeswoman would not comment on the company's long-term plans in Connecticut.

"We'll start here and take it one step at a time," she said.

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