U.S. Bancorp, Fifth Third Said to Mull Chicago Branch Bids

U.S. Bancorp and Fifth Third Bancorp are among five potential bidders for Chicago branches being sold by Citizens Financial Group Inc., people with knowledge of the matter said.

Wintrust Financial Corp., FirstMerit Corp. and PrivateBancorp Inc. are also interested, said the people, asking not to be identified because the information is private. Providence, Rhode Island-based Citizens, the U.S. unit of Royal Bank of Scotland Group Plc, may fetch about $500 million for the 105 branches, the people said.

RBS, which acquired Citizens in 1988, said in February that it will sell a 25 percent stake in the bank to help meet increased capital requirements. The retreat from Chicago, and other markets where it has a smaller presence, could make it easier for another bank to buy all of Citizens, said Jeff Davis, managing director of the financial institutions group at Mercer Capital, a Memphis, Tennessee, advisory firm.

“Chicago is somewhat of a stub operation,” Davis said by telephone. “They are far down the market-share chain. Chicago is a tough, competitive market.”

Most of Citizens’ branches are in the Northeastern U.S., according to its annual report. The Sunday Times reported earlier this month that Toronto-Dominion Bank, Canada’s second-largest lender by assets, is considering a bid for all of Citizens, citing analysts without naming them.

On an Oct. 17 investor call, Toronto Dominion’s Chief Executive Officer Ed Clark said that the lender isn’t on the lookout for another U.S. retail bank and doesn’t need to do a deal, according to a transcript of the call.

Most Fragmented

The sale includes $6 billion in deposits and loans of $2.4 billion, the people familiar with the situation said. First-round bids are due by early November, the people said. Bank of America Corp. is advising Citizens on the sale, they said.

Chicago is among the largest and most-fragmented banking markets in the country, with 235 banks holding $328 billion in deposits as of the end of June, according to data from the Federal Deposit Insurance Corp. None of the interested buyers ranks among the top five deposit holders in Chicago, and Citizens ranked 12th, the data show.

Spokesmen for Citizens, U.S. Bancorp, Fifth Third, FirstMerit, PrivateBancorp and Bank of America all declined to comment on the branch sale. A spokesman for Wintrust didn’t return a call seeking comment.

Only one of the five potential bidders, PrivateBancorp, is based in Chicago. Wintrust is based in Lake Forest, Illinois, while U.S. Bancorp is based in Minneapolis, Fifth Third in Cincinnati, and FirstMerit in Akron, Ohio.

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