The Royal Bank of Scotland has announced that it has sold almost 100 branches located in the Chicago area of the United States as part of the process of gearing up towards the stock market flotation of its American RBS Citizens Financial Group arm later this year.
The 94 Charter One branded properties were acquired by US Bancorp and, although RBS Citizens Financial Group is yet to reveal the terms of the sale, it was confirmed that RBS received a “deposit premium” on the disposal of the bank’s loans worth around $315 million.
Despite the fact that an $8 billion stock market flotation is on the cards later this year for RBS’ American subsidiary, the Chicago sale is widely believed to be an early phase of a plan to scale back operations across the pond.
As well as Charter One, the Citizens Bank arm, which currently has 1,400 branded properties and 18,000 staff in 12 states, will be assessed. It is hoped the sale of loss-making aspects will allow RBS to channel more resources into its UK operations.
Former finance director of RBS and current chief executive of RBS Citizens Financial Group, Bruce Van Saun, believes this initial sale is a positive first step in reorganising RBS’ US interests.
He says; “This transaction will allow us to focus our efforts on our primary Citizens Bank and Charter One markets where we have stronger market positions and better long-term growth prospects.”
Although a large number of branches were included in the sale, RBS does not intend to withdraw from the Chicago market entirely. Customers will still be able to access services such as mortgage lending, consumer finance and auto financing, while smaller local businesses will benefit from an increase in focus regarding the group’s commercial banking services.
With many UK brands, both within and outside the financial sector, choosing to withdraw from the US in order to focus on their core markets, it seems RBS has chosen an opportune moment to make a deal in Chicago. However, with competition remaining high amongst the UK high street banks, it may well be that the banking giant will wish to further assess its position before withdrawing from America entirely.
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