EDINBURGH - Fred Goodwin, the chief executive of Royal Bank of Scotland Group PLC, says he will look to buy more companies in the United States to boost profit as gains from the takeover of National Westminster Bank fade.
Mr. Goodwin helped orchestrate the $37 billion purchase of Natwest three years ago. Royal Bank already owns Citizens Financial Group of Providence, R.I.
The Scottish company reported profits Thursday. They fell 17% in the second half, to $1 billion, because the company doubled special payments to Natwest shareholders, to $1.26 billion. Excluding those payments, profits rose 22%, to $4.44 billion, as Royal Bank absorbed Natwest and boosted revenue.
Citizens posted a 53% increase in full-year pretax profits, to $1.21 billion. It benefited from buying the 345-branch consumer-banking network of Mellon Financial Corp. for $2.2 billion in 2001. Royal Bank acquired Citizens in September 1998.
Citizens, which has grown through 19 acquisitions in 12 years, is the second-biggest lender in New England, after FleetBoston Financial Corp. Last year the Scottish bank bought the U.S. lenders Commonwealth Bancorp. Inc. and Medford Bancorp. for a total of about $723 million.
The Providence banking company accounts for just 12% of its parent's profits. "There's a misconception among shareholders about how large the U.S. business is," said James Eden, an analyst at Commerzbank AG. "It's not big enough to be the driver for the company." He recommends that investors buy Royal Bank.
"Acquisitions in the U.S. definitely look attractive," Mr. Goodwin said on the earnings conference call Thursday. "There are a lot of banks there that could be acquired."
Mr. Goodwin does not face the same antitrust barriers in the United States that he does at home, though he is not ruling out more British deals. The U.K. regulator effectively barred takeovers on the same scale as Natwest when it blocked Lloyds TSB Group PLC's hostile bid for Abbey National PLC in 2001.
Though a purchase the size of Natwest probably is not possible, Mr. Goodwin said, "you can't assume there's nothing we can buy in the U.K."
