Citizens Financial Group hired 150 people, among them 50 senior bankers from First Republic Bank who were hired in June, as well as 25 people focused on wealth management and private banking. It’s opening up six private banking offices in New York City, Boston, and Palm Beach, Fla., as well as three in the San Francisco Bay Area, with plans to expand throughout the country.
Its private banking unit has brought in about $500 million in deposits and investments, the bank said on a quarterly call with analysts on Wednesday.
Citizens expect to break even on the unit in the second half of next year, and the business is expected to add 5 cents a share in earnings in 2025. Citizens also disclosed an investment of $35 million in startup costs for the private bank.
Citizens in July named former First Republic Bank executive Susan DeTray as head of Citizens Private Bank, which will focus on financial services for high-net-worth individuals, as well as venture-capital and private-equity firms, private family foundations, nonprofits and multifamily- and commercial-real-estate and life-sciences clients.
Such clients typically have about $5 million or more in net worth.
The private bank is Citizens’ second coast-to-coast presence, after Citizens Access digital bank, which grew from a financing offer for the purchase of Apple Inc. iPhones.
With the addition of First Republic bankers — and their ties to the venture capital and private-equity world — Citizens sees an opportunity to ramp up its private-client business in a variety of ways, said Donald H. McCree, vice chair and head of commercial banking at Citizens.
“Our secret sauce is being client-focused and providing excellent service around everything you do,” McCree told MarketWatch.
The bank sees itself as a service provider to family members who own companies.
It can also handle M&A transactions as an adviser and help company owners and family members manage the proceeds of a sale.
In one recent deal, McCree said, some of the private owners of a company wanted to sell out and others didn’t. Citizens crafted a deal to sell a stake in the company to a private equity firm to allow some owners to exit, while others rolled over an equity stake into the company under the new private equity owner.
With the wide array of products and services offered by Citizens, which is more diversified than the First Republic was, the former First Republic bankers will have more products to offer their clients, he said.
While Citizens had made a couple of smaller acquisitions in the registered investment adviser space, it had held off from more deals because of the large M&A prices in the space. The addition of the 50 bankers from First Republic will also help in this area, McCree said.
The bank is attracted to the wealth space partly because of its potential to generate loyalty among customers, he added.
Another opportunity, he said, is addressing the money-management needs of baby boomer women, who will control an estimated $30 trillion in wealth over the next decade.
The bulk of the former First Republic Bank was sold to JPMorgan Chase & Co. on May 1.
Citizens Financial Group’s stock is down 36% in 2023, compared with a 30% drop by the SPDR S&P Regional Banking exchange-traded fund and an 11.7% rise by the S&P 500
