As the Rhode Island economy brightens, one dark cloud from the financial crisis refuses to go away: a potential sale of Providence-based Citizens Bank.
The largest bank in Rhode Island by total assets and one of the state’s largest employers, Citizens has been a subject of speculation since its owner, The Royal Bank of Scotland Group, was bailed out by the British government in 2008.
British taxpayers own 81 percent of RBS and as the bank’s revenue has picked up, executives have begun negotiating with U.K. regulators about a path to re-privatization.
But multiple reports this fall suggested that the U.K.’s Financial Services Authority wants RBS to sell its U.S. subsidiary and further slim its balance sheet before leaving government ownership.
That set off speculation – again – among bank, business and government leaders in Rhode Island about the future of the state’s leading bank.
“I have been in touch with executives of Citizens for the last two years and these rumors are perpetual due to the government oversight and unpredictability in the U.K.,” said Greater Providence Chamber of Commerce President Laurie White. “I don’t believe there is anything to [the sale rumors] at this point in time, but I think the rumors will begin to circulate again every time the analyst calls are held and remarks are made.”
The local impact of a sale would depend, of course, on the identity of the buyer and how much of their business now overlaps with Citizens Bank.
In general, a purchase by another regional U.S. bank with an existing presence in the eastern part of the country would seem to pose the most significant threat of major consolidation of branches and corporate offices.
Citizens was RBS’ first major foray in the United States in 1988, so there was no overlap of existing branches or services and the bank retained its name and Providence headquarters.