U.S. BanÂcorp is buyÂing the ChiÂcaÂgo branch netÂwork of RBS Citizens Financial Group for about $315 milÂlion, as the Minneapolis-based lendÂer doubÂles its footÂprint in the fierceÂly comÂpeÂtiÂtive marÂket.
The acÂquiÂsiÂtion, exÂpectÂed to close by midsummer, vaults U.S. Bank into among the top 10 banks in the Chicago-area market.
The purÂchase inÂcludes the 94 reÂtail branchÂes of RBS Citizens' Charter One Bank franÂchise, as well as its small-busiÂness opÂerÂations and cerÂtain midÂdle-marÂket reÂlaÂtionÂships, U.S. Bank said TuesÂday. U.S. Bank is getÂting 800 employees, deÂposÂits of $5.3 bilÂlion and $1.1 bilÂlion in loans.
"As you look at our disÂtriÂbuÂtion in ChiÂcaÂgo, we have not had the depth of disÂtriÂbuÂtion that we would like in a marÂket of that size," said John Elmore, vice chairÂman of comÂmuniÂty bankÂing and branch deÂlivÂerÂy for U.S. Bank. "That's why this is such an exÂcitÂing opÂporÂtuÂniÂty for us."
RBS Citizens said it's carvÂing off its ChiÂcaÂgo branch opÂerÂations as it shifts its foÂcus to larÂger busiÂness cusÂtomÂers.
In a note to cliÂents TuesÂday, David George, an anÂaÂlyst at Robert W. Baird & Co. Inc., called the purÂchase "small but straÂtegic." The purÂchase price was less than what had been expectÂed, he said.
U.S. Bank curÂrentÂly has 90 reÂtail branchÂes in the ChiÂcaÂgo area and more than 1,800 employees. The lender bought the namÂing rights to a 40-stoÂry ofÂfice tower at 190 S. LaÂSalle St. in downÂtown ChiÂcaÂgo and plans to have the U.S. Bank sign up on the buildÂing someÂtime this year. It's keepÂing exÂistÂing space in the RookÂerÂy, a well-known hisÂtorÂic buildÂing downÂtown.
While U.S. Bank has been in ChiÂcaÂgo for years, its busiÂness there reÂalÂly took off afÂter it bought Park National Bank in a 2009 deal with the Federal DeÂposÂit Insurance Corp.
MidÂdle-marÂket comÂmerÂcial cusÂtomÂers, or comÂpanies with revÂeÂnue of $20 milÂlion to $500 milÂlion, have produced double-digÂit growth in the past two years, said MarÂsha Cruzan, U.S. Bank's marÂket presÂiÂdent for ChiÂcaÂgo. U.S. Bank has seen 25 percent growth in small busiÂness lending to comÂpanies with sales unÂder $20 milÂlion.
Elmore said there may be some overÂlap beÂtween Charter One and U.S. Bank branchÂes that are near each othÂer, but U.S. Bank's goal is to mainÂtain a broad netÂwork of branchÂes in ChiÂcaÂgo.
"We're reÂalÂly just startÂing the inÂteÂgraÂtion procÂess now," Elmore said. "All of those deÂtails will be deÂterÂmined throughÂout that procÂess."
The ChiÂcaÂgo area has a repÂuÂtaÂtion as a marÂket with too many banks that is ripe for conÂsolÂiÂdaÂtion. The area is domiÂnatÂed by JPMorgan Chase & Co. which has nearÂly 25 percent marÂket share by deÂposÂits. No. 2 is BMO HarÂris Bank with 12 percent.
RBS Citizens Financial Group is a $120 bilÂlion bank based in Providence, R.I. It opÂerÂates unÂder the Citizens Bank brand in the northÂeast, and under the Charter One brand in IlÂliÂnois, MichÂiÂgan and OÂhiÂo.
RBS said it is sellÂing the ChiÂcaÂgo branchÂes to foÂcus on core Citizens Bank and Charter One marÂkets where it has betÂter growth prosÂpects. It's targeting OÂhiÂo and MichÂiÂgan, New EngÂland, the mid-Atlantic, comÂmerÂcial bankÂing and its naÂtionÂal platÂforms inÂcludÂing franÂchise fiÂnance and health care.
In an interview, Robert Matthews, vice chairÂman for comÂmerÂcial bankÂing, emphasized that RBS Citizens is not pulling out of Chicago and is just prioritizing away from business lines that depend heavily on bricks and mortar branches. It will continue offering consumer loans such as residential mortgages and auto loans, and offer a range of commercial loans and services.
"One of the things we've been inÂvestÂing heavÂiÂly in is buildÂing a capÂiÂtal marÂkets caÂpaÂbilÂiÂty to help comÂpanies raise capÂiÂtal," Matthews said. "We've seen some very notÂable growth."
JenÂniÂfer Bjorhus • 612-673-4683