In contest for LaSalle, reported bidder banks on experience

Last Wednesday, Citizens Financial Group Inc. finished rebranding 10 former branches of Lisle-based GreatBanc Inc. as Charter One Bank.

In its announcement, the Providence, R.I.-based parent of Charter One pointed out that GreatBanc is the latest of 30 "successful" acquisitions it has made since 1998, with all conversions completed on or ahead of schedule.

Now Citizens could face one of its biggest integration tests yet.

A consortium led by its owner, Royal Bank of Scotland Plc, reportedly made a $24.5 billion offer over the weekend for LaSalle Bank, Chicago's No. 2 bank, in a bid to expand its Windy City presence. The deal would make RBS the market share leader in Chicago-area deposits, deposing JPMorgan Chase by a slim margin.

The offer by the RBS group would trump a $21 billion bid that Bank of America made on April 22 for LaSalle, which is owned by Amsterdam-based ABN Amro.

ABN had set a Sunday night deadline to accept higher offers for LaSalle.

But not even that will be the end of it, because Bank of America would still have five days to make a counteroffer.

"We have a binding contract and intend to take all necessary steps to protect our legal rights," a Bank of America spokesman said Sunday.

Representatives from Royal Bank of Scotland and ABN declined to comment Sunday.

Charter One has been trying to beef up its Chicago presence but has been less efficient in picking up market share than LaSalle, despite having about the same number of branches.

LaSalle has about 140 Chicago-area offices and market share of 14.1 percent. Charter One, with about 130 branches, is tied for fifth with Chicago-area market share of 3.18 percent, having completed in February its GreatBanc purchase. GreatBanc had 64,000 customer accounts, 10 branches and 14 ATMs in Cook, Will and McHenry counties.

LaSalle also operates 260 offices in Indiana and Michigan. A deal for LaSalle would springboard Charter One from fifth in the Detroit market, with 6.22 percent market share, to first, with a combined 29.2 percent.

The future of the LaSalle name, which has a 67-year history in Chicago, is uncertain should RBS take it over. But the name would definitely be mothballed if Bank of America wins the bidding contest. Bank of America, the United States' second-biggest bank, has a strategy of operating under its own brand name.

RBS, in contrast, has shown a willingness to operate under more than one brand. In the United States, Citizens does business primarily under two monikers, Citizens and Charter One.

But some question whether RBS would want two brands – LaSalle and Charter One – competing against each other in the same market.

Citizens has more than 1,600 branches, about 3,100 ATMs and more than 25,000 employees. It has branches in 13 states, as well as non-branch retail and commercial offices in about 40 states, and is the nation's eighth-biggest bank. RBS is one of the world's 10 biggest banks.

An acquisition of LaSalle by either Bank of America or RBS will likely result in layoffs. ABN, including LaSalle, currently has about 8,700 Chicago area workers, while Bank of America and Charter One have 3,700 and 1,500, respectively.

Bank of America has already said it sees potential to cut costs at LaSalle by as much as 50 percent, suggesting widespread job reductions.

RBS' bid for LaSalle comes about two weeks after London-based Barclays Plc announced a $88 billion for ABN. As part of the deal, Bank of America would purchase LaSalle for $21 billion.

In what's turning out to be biggest takeover ever for a financial services company, RBS and two other European banks only days later indicated that they would pay about $98 billion for all of ABN.

Then, last Thursday, a Dutch court granted a request from a shareholder group and blocked the sale of LaSalle to Bank of America, saying it was "unacceptable" for ABN to sell LaSalle without shareholder approval.

On Friday in a U.S. District Court in New York, Bank of America sued ABN, seeking to prevent it from negotiating to sell LaSalle to other buyers. It claimed it "stands to sustain billions of dollars of foreseeable monetary damages" and is seeking monetary damages against ABN. ABN assured it that no shareholder vote would be needed under Dutch law to complete the purchase, the lawsuit said.
Source : http://www.chicagotribune.com