Royal Bank of Scotland unit to pay $144 million for Boston's Neworld.

NEW YORK - Continuing the consolidation of New England banks, Citizens Financial Group said on Monday that it will pay $144 million in cash to acquire Boston-based Neworld Bancorp.

Rhode Island-based Citizens, which is owned by Royal Bank of Scotland PLC, will pay 1.6 times book value for Neworld, a $1.1 billion-asset thrift company with 14 branches in Boston and eight on Cape Cod.

The deal marks the third foray into Massachusetts by Citizens in the last 13 months and is the most recent as New England banks have begun to aggressively scout for in-market acquisitions.

Late Monday afternoon, shares of Neworld were trading at $33.25, up $4.50. Because of its foreign ownership, Citizens is not publicly traded here.

Deal Gets Thumbs-Up

Analysts applaud the transaction, which gives Citizens the third-largest retail deposit share in Boston. Citizens gained a foothold in that city this month when it completed its acquisition of the former Boston Five Cents Savings Bank, a $1.8 billion-asset savings bank with 25 branches in and around Boston.

"This surely identifies Citizens as a major player in the Boston market," said Jeffrey L. Cohn, an analyst at H.C. Wainwright & Co. in Boston. "We will be hearing more from them in the months and years to come."

Gerard Cassidy, an analyst at Hancock Institutional Equity Services in Portland, Maine, estimated that Citizens will be able to shave $11 million a year off Neworld's costs by combining it with the Boston Five franchise.

Cost Cutting Called Secondary

"Citizens will make back the premium it is paying through cost savings," Mr. Cassidy said.

But Citizens chairman and chief executive officer Lawrence K. Fish said cost cutting is not the factor driving this deal. He is not planning to shutter any of Neworld's branches nor layoff a significant number of its employees.

"We're not quite focused on that," Mr. Fish said in a phone interview. "We're focused on building an exciting banking company in New England."

Indeed, Citizens has been given the mandate by its parent to grow to $10 billion in assets by the end of 1995. When the Neworld deal is complete, Citizens will hit the $8 billion mark.

Neworld will be integrated into the Citizens Bank of Massachusetts, a unit recently formed to house the Boston Five operation as well as the former Plymouth Five Cents Savings Bank - a failed thrift Citizens bought from the Federal Deposit Insurance Corp. last year.

Heavy Hitter Acquired

Citizens made headlines earlier this month when it lured Robert M. Mahoney, a 22-year veteran of Bank of Boston Corp., to the presidency of its Massachusetts bank. That nascent unit will boast 55 branches and $3.3 billion in assets when the Neworld transaction closes, scheduled for the spring of 1994.

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