Citizens Financial Group

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Citizens Financial Group, Inc.
Type Subsidiary
Industry Finance
Founded 1828
Headquarters Providence, Rhode Island, U.S.
Key people Bruce Van Saun, CEO
Products Financial Services
Employees 21,400
Parent The Royal Bank of Scotland Group
Website www.citizensbank.com
www.charterone.com
Several banks are commonly known as Citizens Bank.

Citizens Financial Group, Inc. is a British-owned American bank headquartered in Providence, Rhode Island, which operates in the states of Connecticut, Delaware, Illinois, Massachusetts, Michigan, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island and Vermont. Citizens is a wholly owned subsidiary of The Royal Bank of Scotland Group (RBS), headquartered in Edinburgh, Scotland. Following the financial rescue of RBS, the company's controlling shareholder is currently the British government. As of 2011, Citizens was the 15th-largest bank in the United States.[1]

History[edit]

Early history[edit]

Citizens was established in 1828 as the High Street Bank in Providence, Rhode Island. In 1871, the Rhode Island legislature gave a second charter to establish the Citizens Savings Bank which eventually acquired its parent group to form Citizens Trust Company. The bank then expanded through Rhode Island, opening a total of 29 branches in that state. It established Citizens Financial Group as a holding company when the bank acquired The Greenville Trust Company in 1954.

In 1985, Citizens changed status from a mutual savings bank to a federal stock savings bank. Expansion into other states began with Massachusetts in 1986.

RBS ownership[edit]

Citizens' branch footprint
Citizens Bank headquarters in downtown Providence, constructed 1991.

In 1988, Citizens accepted a takeover bid from the Royal Bank of Scotland (RBS), based in Scotland, which used Citizens Bank as a stepping stone into the US market. In the following sixteen years under RBS ownership, Citizens acquired several smaller banks in New England to become the second largest bank in the region. Its 1996 acquisition of First NH Bank saw the Bank of Ireland gain a 23.5% stake in Citizens, which RBS repurchased two years.

Expansion outside New England began in 2001, when RBS purchased the retail banking division of Mellon Financial Corporation in Pennsylvania, New Jersey and Delaware. In one stroke, this made Citizens Bank the second-largest bank in Pennsylvania, and a major player in both Philadelphia and Pittsburgh.[2]

In July 2003, the bank purchased the naming rights to the new home field of the Philadelphia Phillies, calling it Citizens Bank Park.

On January 17, 2003, Citizens Financial Group, Inc. purchased Commonwealth Bancorp, Inc.,[3] the holding company for Commonwealth Bank, based in Norristown, Pennsylvania.[4]

In 2004, RBS purchased the credit card division of Connecticut-based People's Bank. This purchase allowed Citizens to issue and market its own credit cards. In late 2004, Citizens Financial acquired Cleveland-based Charter One Bank for US$10.5 billion, with branches in Illinois, Ohio, Indiana, Michigan, upstate New York, and Vermont.[5] This purchase made Citizens Financial the ninth-largest bank in the United States with over $128 billion in assets and 1,400 branches across 13 states, and made 25 percent of RBS profits dependent upon the performance of Citizens Financial Group.

On September 1, 2007, the individual banks under Citizens Financial Group, excluding Citizens Bank of Pennsylvania, merged into RBS Citizens, N.A.[4]

Financial crisis[edit]

On April 18, 2008, RBS revealed that it would post almost $8 billion in losses related to subprime mortgage securities. Less than a month earlier its CEO, Fred Goodwin, denied rumors that losses were possible.[6]

In May 2008, Citizens Financial Group failed to publicly announce that it was under investigation by the SEC for its involvement in the sub-prime mortgage crisis that devastated the U.S. housing market and bond investors around the world.[7] The SEC only investigated banks it suspected of involvement in the purchase and sale of subprime securities.[8]

A Philadelphia developer sued Citizens Bank January 27, 2010, for $8 billion, under a claim that the bank used sham accusations of default to recall loans in an effort to prop up its failing parent companies, Citizens Financial Group and "its ultimate parent, The Royal Bank of Scotland Group."[9]

Potential sale[edit]

Following the effective nationalization of RBS in 2008, speculation arose as to whether RBS would retain Citizens Bank. In 2012, public pressure in the United Kingdom grew for RBS to focus on its home market and sell foreign assets, including Citizens Bank, in order for UK taxpayers to earn their money back. Substantial interest in Citizens Bank has been rumored from other foreign banks such as Brazil-based Itaú Unibanco and Canada-based Toronto-Dominion Bank, the latter of which already has an existing U.S. branch network that overlaps with the existing Citizen footprint east of the Appalachian Mountains.[10] The Bank of Montreal, which also has an existing U.S. presence, has also been mentioned as a possible buyer.[11] Among domestic-based banks that have been mentioned as potential Citizens buyers include JPMorgan Chase, Wells Fargo, U.S. Bancorp, PNC Financial Services, and Fifth Third Bank.[11][12] Citizens has some overlap with all of the domestic banks, with branch divestment all but certain if PNC were to acquire Citizens due to significant overlap in Pennsylvania and Ohio between the two banks as well as the precedent federal regulators requiring PNC to divest 61 National City branches in Western Pennsylvania due to antitrust concerns following PNC's acquisition of National City in late 2008.[11]

On February 28, 2013, RBS confirmed at least a partial spinoff of Citizens through an initial public offering within the next two years. RBS is expected to retain at least majority control of Citizens in the short-term.[13] On October 4, 2013, RBS announced it would sell its Chicago-area branches, which represent 6% of its U.S. deposits;[14] Citizens later agreed to sell those branches to U.S. Bancorp on January 7, 2014.[15] November 1, 2013, RBS announced that it would accelerate divestiture of all of Citizens Financial Group in the US.[16]

Services[edit]

Like several other banks, Citizens has agreements with several supermarket chains to locate bank branches in the stores. The greatest number of these are in Pittsburgh-based Giant Eagle stores, most of which were acquired in the acquisition of Mellon Financial Corporation's retail banking division. Citizens also operates branches inside many Stop & Shop and Shaw's stores in New England. One unique aspect at Citizens branches inside supermarkets is full-service banking from 10 am to 3 pm on Sunday, when banks, including Citizens standalone branches, are traditionally closed. This made Citizens one of the first banks in North America to operate on Sundays. In September 2010, Giant Eagle announced a new agreement with Huntington Bank in which Huntington would open branches in several stores in Ohio and West Virginia and will replace existing branches of other banks when the store's agreements with those banks expire.[17]

In October 2009, Citizens Bank opened a full-service branch inside a Dunkin' Donuts in Bellingham, Massachusetts. The branch offers teller windows, a full-service automated teller machine (ATM) and Dunkin' Donuts promotions for using the bank's services.[18]

In addition, RBS purchased Lynk systems of Atlanta to processes non-cash transactions (such as credit, debit, EBT, loyalty, gift, and check transactions) from merchant point-of-sale terminals, web sites, and ATMs. It rebranded the company as RBS Lynk, and later as RBS WorldPay before selling the component November 30, 2010, as part of the company's disposition of its Global Merchant Services business.[19]

Citizens was one of the first banks in the US to use Radio-frequency identification (RFID) technology on its ATM cards, via MasterCard PayPass. In late 2009, however, Citizens began reissuing its cards under Visa without the RFID technology.

On June 25, 2008, Citizens Bank announced would sell 18 branches in upstate New York as it prepared to open 57 branches downstate. Community Bank System Inc. of DeWitt, New York purchased the branches in Ausable Forks, Champlain, Fort Covington, Indian Lake, Lake Placid, Lyons Falls, Long Lake, Malone, Newcomb, North Creek, Plattsburgh, Saranac Lake, Ticonderoga, Tupper Lake and Whitehall.[20] The sale completed on November 7, 2008.

Charter One Financial[edit]

Charter One Bank branch, downtown Ypsilanti, MI

In late 2004, Citizens Financial acquired Cleveland-based Charter One Financial, parent company of Charter One Bank, with branches in Illinois, Ohio, Indiana, Michigan, upstate New York, and Vermont. Because Citizens Republic Bancorp of Flint, Michigan already operated under the Citizens Bank name in most of Charter One's territory, Citizens Financial elected to keep the Charter One name in Charter One's old Midwestern footprint. However, it rebranded the New York and Vermont branches as Citizens Bank.

Despite the use of the different names, the two banks are otherwise the same. Charter One has been fully integrated into Citizens, and has adopted an identical logo. The websites for both banks are identical, with the only difference being the name. Citizens customers can bank at Charter One locations and vice-versa.

In early 2005, the Charter One name replaced the Citizens Bank banner on seven branches in Butler County, Pennsylvania. This rebranding resolved a 3½-year-old name dispute with Butler-based Citizens National Bank. By mid-2005, Citizens National and Citizens Financial agreed to a compromise. Citizens National Bank changed its name to NexTier Bank, while the Citizens Financial Group branches reverted to the "Citizens Bank" name.[21]

In 2003, Charter One purchased Advance Bank, Inc. with 14 branches in Chicago's southern suburbs.[22] In February 2007, the bank expanded its presence in the Chicago market by acquiring GreatBank, GreatBank Chicago, and First National Bank — all brands of GreatBanc Inc. of Chicago, Illinois. With this acquisition came GreatBanc's 10 banking locations and 14 ATMs throughout Cook, McHenry and Will counties. This transaction expanded Charter One’s presence in Chicago, Skokie and Evanston and provided entry into Olympia Fields, Chicago Heights, Frankfort, Cary and Algonquin.[23]

In November 2008, Charter One sold its network of 65 branches in Indiana to Old National Bank which rebranded them under the Old National Bank banner. The sale completed in June 2010.[24]

In 2013, FirstMerit Bank acquired Flint-based Citizens Republic Bancorp and subsequently rebranded all branches as FirstMerit banks.[25] With conflicting names no longer an issue, Citizens Bank announced June 30, 2014, that Charter One banks in Michigan and Ohio will be rebranded Citizens Banks. The name change is expected to take place in mid-2015, and will bring to an end the name Charter One in Cleveland, Ohio; the city in which it was founded.[26]

January 7, 2014, Citizens announced it agreed to sell 94 branches in metropolitan Chicago to U.S. Bank increasing US Bank's presence in the area from 90 branches to 184 and increasing its area deposits from $6 billion to $11.3 billion.[27] The transaction closed June 23, 2014, and US Bank began to rebrand the branches.[28]

Current size and scope[edit]

As of 2014 Citizens Financial Group, Inc. is the 12 largest bank in the United States. Today, Citizens Financial Group, Inc. is a $127 billion commercial bank holding company with 18,400 employees. Through its subsidiaries, RBS Citizens, N.A. and Citizens Bank of Pennsylvania, it operates more than 1,300 branches and approximately 3,500 ATMs in 12 states under the names Citizens Bank and Charter One Bank.[29]

See also[edit]

References[edit]

  1. ^ Grocer, Stephen (24 March 2011). "Ranking the 50 Biggest U.S. Banks: From BofA to Commerce Bancshares". The Wall Street Journal (Dow Jones & Company). Retrieved 2014-08-12. 
  2. ^ Meltzer, Marc (18 July 2001). "Citizens Bank to buy Mellon-PSFS Will take over 345 branches in 4 states, 124 in Phila. area". Philadelphia Inquirer. Retrieved 2014-08-12. 
  3. ^ "Company Overview of Commonwealth Bancorp, Inc.". Bloomberg BusinessWeek. Retrieved 2014-08-12. 
  4. ^ a b "Bank Mergers and Acquisitions". Connecticut Department of Banking. 26 June 2014. Retrieved 2014-08-12. 
  5. ^ "Charter One Shareholders Approve Merger With Citizens" (Press release). Charter One. 23 August 2004. Retrieved 2014-08-12. 
  6. ^ Larsen, Peter; Croft, Jane & Burgess, Kate (18 April 2008). "Royal Bank of Scotland poised to reveal £4bn loss, May Auction Direct Line and Churchill to raise cash". Financial Times. (subscription required (help)). 
  7. ^ Smith, Mark (12 May 2008). "Royal Bank under investigation over US sub-prime loans". Glasgow: The Herald. Retrieved 2014-08-12. 
  8. ^ Winnett, Robert (20 March 2009). "RBS traders hid toxic debt". The Daily Telegraph (London). Retrieved 2014-08-12. 
  9. ^ Hurdle, Jon (28 January 2010). "Developer sues RBS unit Citizens Bank for $8 bln". Reuters. Retrieved 2014-08-12. 
  10. ^ Colchester, Max; Enrich, David (21 October 2012). "RBS, U.K. Wrestle Over Fate of Citizens". The Wall Street Journal. Retrieved 2014-08-12. 
  11. ^ a b c Tascarella, Patty (24 October 2012). "Citizens Bank sale would impact Pittsburgh". Pittsburgh Business Times. Retrieved 2014-08-12. 
  12. ^ Wallack, Todd (11 August 2012). "Ailing parent RBS insists Citizens Bank not for sale". The Boston Globe. Retrieved 2014-08-12. 
  13. ^ Tascarella, Patty (28 February 2013). "RBS confirms partial Citizens IPO". Pittsburgh Business Times. Retrieved 2014-08-12. 
  14. ^ Sabatini, Patricia (13 October 2013). "30 Years: PNC eats up market share, boosts Downtown building". Pittsburgh Post-Gazette. 
  15. ^ Bray, Chad (7 January 2014). "Citizens Financial to Sell Chicago-Area Branches to U.S. Bancorp". The New York Times. 
  16. ^ "RBS announces plans to accelerate partial IPO for RBS Citizens Financial Group and fully divest Citizens by 2016" (Press release). Citizens Financial Group. 1 November 2013. Retrieved 2014-08-12. 
  17. ^ "Huntington Bank, Giant Eagle ink 15-year deal". Bloomberg BusinessWeek. Associated Press. 29 September 2012. Retrieved 2014-08-12. 
  18. ^ Abelson, Jenn (21 October 2009). "Pastries and finance: a match made in Bellingham". The Boston Globe. Retrieved 2014-08-12. 
  19. ^ Kar-Gupta, Sadip (6 August 2010). "RBS agrees $3 billion WorldPay sale to Advent, Bain". Reuters. Retrieved 2014-08-12. 
  20. ^ Heath, Dan (25 June 2008). "Community Bank buying Citizens Bank branches". Press-Republican (Plattsburg, New York). Retrieved 2014-08-12. 
  21. ^ Olsen, Thomas (7 May 2013). "NexTier, Farmers & Merchants to merge, with $1B combined assets, by 1stQ 2014". Pittsburgh Tribune-Review. Retrieved 2014-08-12. 
  22. ^ Quibley, Kelly (16 January 2003). "Charter One to buy suburban bank". Crain's Chicago Business. Retrieved 2014-08-12. 
  23. ^ "CFG Acquisition History". Citizens Financial Group. Retrieved 2014-08-12. 
  24. ^ Newmann, Peter (28 June 2010). "Old National acquires Charter One". WPTA News (Fort Wayne, Indiana). Retrieved 2014-08-12. 
  25. ^ "First Merit acquires Citizens Republic Bank". Argus-Press (Owosso, Michigan). 9 June 2013. Retrieved 2014-08-12. 
  26. ^ "Charter One to Change its name to Citizens Bank in 2015". WOIO News (Cleveland). 30 June 2014. 
  27. ^ Ruminski, Bill (7 January 2014). "Chicago-area Charter One branches sold to U.S. Bank". Chicago Sun-Times. Retrieved 2014-08-12. 
  28. ^ "U.S. Bank Closes on Acquisition of Chicago-Area Charter One Bank Franchise". The Wall Street Journal (Press release). U.S. Bank. 23 June 2014. Retrieved 2014-08-12. 
  29. ^ "At-A-Glance". Citizens Financial Group. 31 March 2014. Retrieved 2014-08-12. 

External links[edit]