Is Popular Inc. poised to retreat from the mainland United States?
On the heels of the San Juan, Puerto Rico, company's agreement late last month to sell what was left of its U.S. consumer finance business, the company is shopping its Chicago-based retail banking arm for roughly $1 billion, Crain's Chicago Business reported this week.
The report said Popular has retained Citigroup Inc.'s investment bank to shop the unit. The Chicago magazine named JPMorgan Chase & Co., Wells Fargo & Co., or U.S. Bancorp as possible buyers.
On Tuesday, all three rumored suitors declined to comment, and Citigroup did not return a call seeking comment.
In an e-mailed statement to American Banker on Tuesday, Richard L. Carrion, the chairman and CEO of Popular, wrote: "We have said for months that we are evaluating strategic alternatives. We do things first and then make announcements. We certainly do not comment on rumors."
On Aug. 28, Popular agreed to sell about $1.17 billion of subprime mortgage assets and servicing rights to Goldman Sachs Group Inc. in a move aimed at bolstering liquidity at the $41.7 billion-asset banking company.
On Tuesday, analysts Anthony Polini of Raymond James & Associates and Adam Barkstrom of Sterne Agee & Leach Co. said they have been hearing rumors for some time that Popular wants to sell its California and Chicago operations.
Popular's website says 66 of its 139 mainland U.S. branches are in California or Illinois. The mainland unit has $12.8 billion of assets.
However, both analysts said that Popular seems intent on retaining its New York and Florida operations.
"The Northeast has more of a Puerto Rican focus, which ties in with their home market, versus Chicago and L.A.," said Mr. Barkstrom.
The company's second-quarter earnings fell 13% from a year earlier, to $103.3 million, or 36 cents a share, when it almost doubled its loan-loss provision, to $168.2 million, primarily to cover losses on mainland residential real estate credits.
Last week, Popular said the Goldman deal would free up less than the $700 million of liquidity originally expected. It said it expects to recognize a loss of at least $450 million on the deal.