RBS sells Chicago branches to US Bancorp for $315 mn

RBS Citizens Financial Group Inc (RBSCFG), the US subsidiary of the Royal Bank of Scotland Group (RBS) said yesterday that it is selling its Chicago-area operations to financial services holding company US Bancorp for approximately $315 million.

The sale is in line with RBS's strategy of divesting non-core assets and streamlining its investment banking business.

The transaction includes 94 branches operating in Chicago area under Charter One bank brand, small business operations and select middle market relationships, RBS said in a statement.

The business has $5.3-billion in deposits, $1.1 billion in loans and a deposit premium of approximately $315 million.

The deal would allow RBSCFG to focus on primary Citizens Bank and Charter One markets and pursue strategic business growth activities.

RBSCFG chairman and CEO Bruce Van Saun said, "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."

RBSCFG will retain its commercial banking operations, mortgage lending, student lending and auto lending operations in Chicago.

For US Bancorp, the deal would double its footprint in the highly competitive Chicago market.

''This transaction will double our market share in Chicago, giving us a great opportunity to not only deepen existing customer relationships, but a chance to serve new customers with our extensive mix of products and services,'' said John Elmore, vice chairman of US Bancorp's banking unit.

On closing of the deal, all employees of the divested business will be offered comparable jobs and transfers to US Bancorp.

The transaction is expected to close in mid-2014 subject to regulatory approval.

Providence, Rhode Island-based RBSCFG is a $120-bn commercial bank holding company operating branch network in 12 states and having commercial offices in more than 30 states, through its two subsidiaries RBS Citizens NA and Citizens Bank of Pennsylvania. Overall, the Group has over 1,400 branches, over 3,500 ATMs and more then 18,000 employees.

RBS which was bailed out by the British government at the height of the credit crunch five years ago. The bank which is 81-per cent owned by the government, said last year that it would sell assets and shrink its investment banking business to improve its financials.

In September, RBS divested a stake in its British branch network for $984 million and a month before, sold its Indian business banking, credit cards and mortgage portfolio to Ratnakar Bank.

It has been reported that RBS is planning an initial public offering of Citizens Financial in later half of 2014.

Minneapolis, Minnesota-based US Bancorp is a diversified financial services holding company and operates more than 3,000 banking offices in 25 states and had about $361 billion in assets as of 30 September and its 2012 revenue was $17.6 billion.

BofA Merrill Lynch acted as financial advisor to RBSCFG on the deal.