U.S. Bancorp to acquire 94 Chicago RBS locations

Chicago's banking environment is set to experience a major shift.

In an effort to prepare for an initial public offering of its U.S. retail franchise, the Royal Bank of Scotland Group announced it will sell its 94 Chicago branches, which operate as Charter One, to U.S. Bancorp. The move will alter the city's commercial real estate environment. 

The U.K. government, which owns about an 81 percent stake in RBS, pressured the bank to sell its franchise so it can focus on its British operations. The sale will also allow it to invest in its U.S. franchise, which goes by RBS Citizens, the Wall Street Journal reported.

"This transaction will allow us to focus on our primary Citizens Bank and Charter One markets where we have stronger market positions and better long-term growth prospects," said Bruce Van Saun, RBS chairman and CEO.

Before this sale was announced, RBS had sold some branches in Indiana and Long Island, N.Y., but Van Saun said the Chicago sale should mark the end of such transactions before the IPO.

Charter One has $5.3 billion in local deposits and $1.1 billion in local loans, and U.S. Bancorp said it would pay a $315 million premium on the deposits. Despite the sizable sale, RBS Citizens will maintain about 1,400 U.S. branches and $120 billion in 11 states, according to the Journal. It also won't completely pull out of Chicago, as it will maintain some activity in the consumer business lines of mortgage lending, education finance and auto finance.

The sale, which still is subject to regulatory approval, will double U.S. Bancorp's deposit share in the Chicago area to about $11.3 billion, said John Elmore, chairman of community banking and branch delivery.

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