How Citizens Bank and Charter One Figure into RBS' Global Startegy

The Royal Bank of Scotland (RBS) Group (NYSE:RBS) has a majority of its operations in the UK. But over the years, in a bid to expand its operations globally, the company has established a substantial presence in the United States through its wholly owned subsidiary, the Citizens Financial Group. RBS took ownership of the Citizens Group way back in 1988, and today provides banking services under the Citizens and Charter One brands. Charter One Bank was acquired by RBS more recently, in 2004. The 84-per cent state-owned RBS group competes with other worldwide banking institutions and financial services group like Citigroup ( C ), Barclays ( BCS ), Bank of America ( BAC ), UBS (NYSE:UBS) and JPMorgan Chase (NYSE:JPM).

We have a $13.43 price estimate for RBS' stock , roughly in line with market price. And our analysis suggests that the U.S.-operations of the Citizens Group contributes to about 13% of this value.

Citizens Bank and Charter One cater to a niche American market

The Citizens Financial Group today consists of more than 1,500 branches spread across New England, the Mid-Atlantic and the Midwest. The group has limited presence in other parts of the U.S. through non-branch offices in other states. In fact, the company states in its annual report that Citizens ranks among the top five banks in New England in terms of share in the region's deposit market.

The Citizens group is engaged in both retail and corporate banking activities, and constitutes RBS' U.S. retail & commercial banking division.

Recovery in the U.S. market will help this division grow in the years to come

RBS' U.S. operations have held outstanding loans hovering around $100 billion over the past few years. And we believe this loan volumes could double over the next 5 years.

This is largely due to a higher expected savings rate, coupled with recovery in the markets boosting personal incomes and savings. And this growth will drive both interest incomes as well as fee incomes for RBS - which have contributed roughly 60% and 40% respectively of the division's revenues in past years.

See our complete analysis for RBS stock here

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story


Other Topics

Investing Stocks US Markets

Latest Markets Videos


    Trefis is an interactive financial community structured around trends, forecasts and insights related to some of the most popular stocks in the US. Whereas most finance sites simply give you the facts about where a stock has been and what a company has done in the past, Trefis focuses entirely on the future.

    Learn More